DOCUMENT_AND_ENTITY_INFORMATIO
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended | |
Sep. 30, 2014 | Nov. 14, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'RAINMAKER SYSTEMS INC | ' |
Entity Central Index Key | '0001094007 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 42,252,329 |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $170 | $3,633 |
Restricted cash | 61 | 3 |
Accounts receivable, net of allowance of $10 and $11, respectively | 1,262 | 3,554 |
Prepaid expenses and other current assets | 1,287 | 1,618 |
Total current assets | 2,780 | 8,808 |
Property and equipment, net | 891 | 691 |
Other non-current assets | 919 | 840 |
Total assets | 4,590 | 10,339 |
Current liabilities: | ' | ' |
Accounts payable | 15,581 | 13,042 |
Accrued compensation and benefits | 769 | 1,001 |
Other accrued liabilities | 2,263 | 3,665 |
Deferred revenue | 2,027 | 1,965 |
Convertible and supplemental notes payable, net of discount of $4,457 and $0 | 231 | 0 |
Derivative liability conversion option | 952 | 0 |
Notes payable | 200 | 3,641 |
Total current liabilities | 22,023 | 23,314 |
Deferred tax liability | 0 | 26 |
Deferred revenue, less current portion | 2,135 | 1,629 |
Common stock warrant liability | 1,446 | 93 |
Other long-term liabilities | 90 | 172 |
Total liabilities | 25,694 | 25,234 |
Commitments and contingencies | ' | ' |
Stockholders’ deficit: | ' | ' |
Preferred stock, $0.001 par value; 5,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 50,000 shares authorized, 43,582 shares issued and 42,259 shares outstanding at September 30, 2014 and 43,795 shares issued and 41,495 shares outstanding at December 31, 2013 | 42 | 41 |
Additional paid-in capital | 136,685 | 137,445 |
Accumulated deficit | -155,837 | -149,169 |
Accumulated other comprehensive loss | -363 | -336 |
Treasury stock, at cost; 1,323 shares at September 30, 2014 and 2,300 shares at December 31, 2013 | -1,631 | -2,876 |
Total stockholders’ deficit | -21,104 | -14,895 |
Total liabilities and stockholders’ deficit | $4,590 | $10,339 |
CONSOLIDATED_BALANCE_SHEET_Una
CONSOLIDATED BALANCE SHEET (Unaudited) (Parentheticals) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Accounts receivable, allowance | $10 | $11 |
Convertible notes payable, discount | $4,457 | $0 |
Preferred stock, par value (USD per share) | $0.00 | $0.00 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (USD per share) | $0.00 | $0.00 |
Common stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, issued (in shares) | 43,582,000 | 43,795,000 |
Common stock, oustanding (in shares) | 42,259,000 | 41,495,000 |
Treasury stock (in shares) | 1,323,000 | 2,300,000 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net revenue | $1,882 | $4,160 | $9,139 | $13,546 |
Cost of services | 1,834 | 3,008 | 8,068 | 9,324 |
Gross profit | 48 | 1,152 | 1,071 | 4,222 |
Operating expenses: | ' | ' | ' | ' |
Sales and marketing | 445 | 905 | 2,260 | 2,422 |
Technology and development | 778 | 1,231 | 2,517 | 3,613 |
General and administrative | 699 | 2,102 | 2,577 | 6,853 |
Restructuring expense | 365 | 0 | 365 | 0 |
Depreciation and amortization | 117 | 396 | 286 | 1,241 |
Total operating expenses | 2,404 | 4,634 | 8,005 | 14,129 |
Operating loss | -2,356 | -3,482 | -6,934 | -9,907 |
(Gain) loss due to change in fair value of warrant liability and derivative liability | -1,267 | 66 | -1,284 | -148 |
Loss on issuance of convertible notes payable | 483 | 0 | 483 | 0 |
Interest and other expense, net | 321 | 59 | 589 | 205 |
Loss before income tax expense | -1,893 | -3,607 | -6,722 | -9,964 |
Income tax expense | -86 | -20 | -53 | 35 |
Net loss from continuing operations | -1,807 | -3,587 | -6,669 | -9,999 |
Net income (loss) from discontinued operations, net of tax | 0 | -34 | 0 | 53 |
Net loss | -1,807 | -3,621 | -6,669 | -9,946 |
Foreign currency translation adjustments | 10 | 85 | -26 | -87 |
Comprehensive loss | ($1,797) | ($3,536) | ($6,695) | ($10,033) |
Basic and diluted net income (loss) per share: | ' | ' | ' | ' |
Net loss from continuing operations (USD per share) | ($0.04) | ($0.09) | ($0.16) | ($0.28) |
Net income (loss) from discontinued operations (USD per share) | $0 | $0 | $0 | $0 |
Net loss (USD per share) | ($0.04) | ($0.09) | ($0.16) | ($0.28) |
Weighted average common shares - basic and diluted (in shares) | 41,891 | 40,684 | 41,980 | 35,566 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating activities: | ' | ' |
Net loss | ($6,669) | ($9,946) |
Adjustment for income from discontinued operations, net of tax | 0 | -53 |
Adjustment to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization of property and equipment, incl. asset impairment | 345 | 1,241 |
Amortization of debt discount | 291 | 0 |
Gain due to change in fair value of warrant liability and derivative liability conversion feature | -1,284 | -148 |
Stock-based compensation expense | 291 | 1,352 |
Provision for allowance for doubtful accounts | -1 | 0 |
Loss on issuance of convertible notes payable | 483 | 0 |
Provision for allowance of credit card receivables | 0 | 420 |
Provision for allowances for other assets | 0 | 280 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 2,318 | -848 |
Prepaid expenses and other assets | 225 | -207 |
Accounts payable | 2,557 | 3,475 |
Accrued compensation and benefits | -246 | 576 |
Other accrued liabilities | -1,226 | 230 |
Deferred tax liability | -26 | 40 |
Deferred revenue | 568 | 650 |
Net cash used in continuing operations | -2,374 | -2,938 |
Net cash provided by discontinued operations | 0 | 53 |
Net cash used in operating activities | -2,374 | -2,885 |
Investing activities: | ' | ' |
Purchases of property and equipment | -543 | -1,614 |
Change in restricted cash, net | 0 | 35 |
Net cash used in continuing operations | -543 | -1,579 |
Net cash used in discontinued operations | 0 | 0 |
Net cash used in investing activities | -543 | -1,579 |
Financing activities: | ' | ' |
Proceeds from issuance of common stock | 0 | 5,534 |
Proceeds from borrowings | 3,340 | 200 |
Repayment of borrowings | -3,787 | -1,397 |
Restricted cash related to borrowings | -58 | 0 |
Tax payments in connection with treasury stock surrendered | -5 | -132 |
Net cash provided by (used in) continuing operations | -510 | 4,205 |
Net cash provided by discontinued operations | 0 | 0 |
Net cash provided by (used in) financing activities | -510 | 4,205 |
Effect of exchange rate changes on cash | -36 | -69 |
Net increase (decrease) in cash and cash equivalents | -3,463 | -328 |
Cash and cash equivalents at beginning of period | 3,633 | 4,494 |
Cash and cash equivalents at end of period | 170 | 4,166 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for interest | 164 | 161 |
Cash paid for income taxes | 16 | 49 |
Supplemental disclosures of non-cash investing and financing activities: | ' | ' |
Retirement of fully depreciated property and equipment | 0 | 590 |
Common stock issued in settlement of claim | 200 | 0 |
Warrants issued to convertible note holders | 2,050 | 0 |
Conversion feature of convertible notes payable | 1,539 | 0 |
Supplemental notes payable | 1,545 | 0 |
Accrued interest on convertible notes payable | $53 | $0 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business | |
Rainmaker Systems, Inc. and its subsidiaries ("Rainmaker", "we", "our", or "the Company") is focused on the development and marketing of a platform for the management of outside training for profit. In addition, we generate sales from lead generation services, and SMB sales and contract renewals. | |
Our ViewCentral SaaS platform provides an end-to-end solution for the management and delivery of training and certification programs, or training-as-a-business, for corporations. The ViewCentral Learning Management System ("LMS") platform is a SaaS, cloud based, on-demand, training management system, available 24x7 with no software installation. This self-service platform is highly configurable, so our customers utilize only the modules they need, branded as they choose. Designed specifically to automate time-consuming manual administration and to maximize training participation, the ViewCentral suite contains tools for before, during and after course delivery. | |
We are headquartered in Campbell, California, in the heart of the Silicon Valley. Our global clients consist primarily of large enterprises operating in a range of industries. Our strategy for long-term success of the business is to maintain and improve our position as a leading LMS provider. This will involve ongoing investment in our LMS platform to meet market demands, as well as building the sales and marketing infrastructure to support growth. | |
Principles of Consolidation | |
The accompanying condensed consolidated financial statements include the accounts of Rainmaker Systems, Inc. and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. | |
Basis of Presentation | |
The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The interim financial statements are unaudited but reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the results of these periods. | |
The results of our operations for the three and nine months ended September 30, 2014 are not necessarily indicative of results to be expected for the year ending December 31, 2014, or any other period. These consolidated financial statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 ("2013 Form 10-K"), as filed with the SEC on April 1, 2014. Balance sheet information as of December 31, 2013 has been derived from the audited financial statements for the year then ended. | |
Reclassifications | |
Certain reclassifications have been made to the prior year's condensed consolidated statements of comprehensive loss to conform to the current year presentation. | |
Liquidity and Going Concern | |
As reflected in the accompanying consolidated financial statements, we had a net loss from continuing operations of $6.7 million for the nine months ended September 30, 2014. During the nine months ended September 30, 2014, we used $2.4 million in cash in operating activities. | |
At September 30, 2014, the Company had a net working capital deficit of $19.2 million. Our principal source of liquidity as of September 30, 2014 consisted of $170,100 of cash and cash equivalents and $1.3 million of net accounts receivable. Notes payable under the Convertible and Supplemental Notes were $3.1 million and $1.5 million, respectively, as of September 30, 2014. Another $200,000 was payable under the Revolving Line of Credit Notes. We have received notices of default and acceleration from investors holding our Revolving Line of Credit Notes, Convertible Notes and Supplemental Notes. See Note 5 for further discussion of our debt agreements and notices of default thereunder. | |
Our accounts payable balance increased from $13.0 million as of December 31, 2013 to $15.6 million as of September 30, 2014. $12.9 million of the September 30, 2014 accounts payable balance is related to a merchant account of a customer. | |
In order to meet our operating requirements, we will need to raise additional capital from outside third parties or from the sale of assets and restructure our obligations. As part of this process, in October 2014 we sold a customer contract and subcontracts to N3 North America, LLC. Additionally, we are pursuing a plan to achieve profitable operations through a combination of increased sales and decreased expenses. There can be no assurance that we will be successful in obtaining third party capital, selling assets or restructuring our obligations. We do not have adequate cash or financial resources to operate for the next twelve months without raising significant additional capital, which raises substantial doubt about our ability to continue as a going concern. | |
In addition to the liquidity issues noted above, some key vendors of the Company have either formally or informally, via phone, email, mail, or a combination of one or more of these methods, given the Company a notice of material breach for non-payment, and have informed us of their rights under the various service agreements to which we entered. Their rights include the suspension or cancellation of service and a demand for immediate payment, among other remedies. The Company is in communications with these vendors and in some cases has worked out extended payment terms. There is no guarantee that the Company will be able to reach agreements with all vendors or that it will in all future circumstances be able to fulfill the terms of all extended payment terms, which could have a significant negative impact on our operations and financial position. Our revenue generation is dependent on the ability of the Company to continue to (1) avoid the cancellation of key vendor services (2) raise money through the sale of assets or the addition of new debt or equity to pay down and pay off key vendors and (3) meet the terms of existing and future payment plans. The failure to accomplish these goals could seriously impact our operations and financial position. | |
On November 6, 2014, the Company received a notice of default from investors holding the Revolving Notes. The notice of default stated that an event of default had occurred as a result of the Company’s failure to repay principal when due on October 2, 2014, and declared all principal and accrued interest outstanding under the Revolving Notes to be immediately due and payable. At November 6, 2014 accrued interest on the Revolving Notes was $2,176. | |
On November 6, 2014, the Company also received a notice of default from investors (the “Majority Investors”) holding $1.8 million of the outstanding principal amount of the Company’s Convertible Notes and $900,000 of the outstanding principal amount of the Company’s Supplemental Notes. The notice of default stated that an event of default had occurred under the Convertible Notes and Supplemental Notes as a result of the Company’s failure to repay the above-referenced Revolving Notes when due, and declared all principal and accrued interest outstanding under the Convertible Notes and Supplemental Notes held by the Majority Investors to be immediately due and payable. | |
On November 17, 2014, the Company received a notification of disposition of collateral from the collateral agent for the holders of the Convertible Notes and Supplemental Notes notifying the Company that a foreclosure sale of all or substantially all of the Company’s assets would take place on December 4, 2014. If the Majority Investors and collateral agent elect to proceed with the foreclosure sale of the Company’s assets, upon completion of such sale the Company would no longer be able to continue as a going concern and would immediately cease operations. The Majority Investors have represented to the Company that in the event of a foreclosure sale in which the Majority Investors acquire the Company’s assets, their intent would be to continue operating the ViewCentral business in a separate legal entity that continues existing contractual agreements with the Company’s ViewCentral customers. | |
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The ability of the Company to continue as a going concern is dependent on our ability to develop profitable operations through implementation of our current business initiatives. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Our estimates are based on historical experience, input from sources outside of the Company, and other relevant facts and circumstances. Actual results could differ materially from those estimates. Accounting policies that include particularly significant estimates are revenue recognition and presentation policies, valuation of accounts receivable, measurement of our deferred tax asset and the corresponding valuation allowance, commitments and contingencies, fair value estimates for the expense of employee stock options, embedded derivative features and warrants and the assessment of recoverability and impairment long-lived assets. | |
Significant Accounting Policies - Convertible Instruments | |
The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP. | |
Recent Accounting Standards | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements. | |
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. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on the condensed consolidated financial statements. |
NET_LOSS_PER_SHARE
NET LOSS PER SHARE | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
NET LOSS PER SHARE | ' | |||||||||||||||
NET LOSS PER SHARE | ||||||||||||||||
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the year. Diluted net loss per share also gives effect, as applicable, to the potential dilutive effect of outstanding stock options and warrants, using the treasury stock method, unvested restricted share awards, and convertible securities, using the if converted method, as of the beginning of the period presented or the original issuance date, if later. | ||||||||||||||||
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net loss from continuing operations | $ | (1,807 | ) | $ | (3,587 | ) | $ | (6,669 | ) | $ | (9,999 | ) | ||||
Net income (loss) from discontinued operations | — | (34 | ) | — | 53 | |||||||||||
Net loss | $ | (1,807 | ) | $ | (3,621 | ) | (6,669 | ) | (9,946 | ) | ||||||
Weighted-average shares of common stock outstanding – basic and diluted | 41,891 | 40,684 | 41,980 | 35,566 | ||||||||||||
Basic and diluted net income (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.09 | ) | $ | (0.16 | ) | $ | (0.28 | ) | ||||
Discontinued operations | — | — | — | — | ||||||||||||
Net loss | $ | (0.04 | ) | $ | (0.09 | ) | $ | (0.16 | ) | $ | (0.28 | ) | ||||
The following table presents the unvested restricted stock awards and "in the money" stock options and stock warrants that were excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2014 and 2013 as these securities were anti-dilutive (in thousands). | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Unvested restricted stock awards | 377 | 1,963 | ||||||||||||||
Stock options | 1 | 131 | ||||||||||||||
Stock warrants | 1,937 | — | ||||||||||||||
Total anti-dilutive securities | 2,315 | 2,094 | ||||||||||||||
Stock options and warrants that were not "in the money" at September 30, 2014 and 2013 were 4,100,000 and 2,879,000, respectively. |
CUSTOMER_CONCENTRATION
CUSTOMER CONCENTRATION | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Risks and Uncertainties [Abstract] | ' | |||||||
CUSTOMER CONCENTRATION | ' | |||||||
CUSTOMER CONCENTRATION | ||||||||
We have generated a significant portion of our revenue from sales to limited number of clients. The following table presents the concentration of revenue from significant customers for the three and nine months ended September 30, 2014 and 2013. | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Microsoft Corporation | 38% | 42% | 52% | 41% | ||||
Symantec Corporation | —% | 26% | —% | 25% | ||||
Verizon Communications | 14% | —% | 11% | —% | ||||
Hewlett-Packard Company | 12% | 12% | —% | 10% | ||||
The following table presents the concentration of accounts receivable as of September 30, 2014 and December 31, 2013. | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Microsoft Corporation | 17% | 25% | ||||||
Symantec Corporation | 36% | 40% | ||||||
Hewlett-Packard Company | 11% | 11% | ||||||
Splunk Inc. | 15% | —% | ||||||
We have outsourced services agreements with our significant clients that expire at various dates ranging through March 2018. Our agreements with Symantec expired on March 31, 2014. Certain agreements with Microsoft expired on June 30, 2014 and were not renewed. On October 15, 2014, the Company and N3 North America, LLC signed and closed an Asset Purchase Agreement pursuant to which the Company sold to N3 our remaining Microsoft contract. This contract represented 20% of net revenue for the nine months ended September 30, 2014. |
BALANCE_SHEET_COMPONENTS
BALANCE SHEET COMPONENTS | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Balance Sheet Related Disclosures [Abstract] | ' | |||||||||
BALANCE SHEET COMPONENTS | ' | |||||||||
BALANCE SHEET COMPONENTS | ||||||||||
Prepaids and Other Current Assets | ||||||||||
Prepaids and other current assets consist of the following (in thousands): | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
Prepaids and other current assets: | ||||||||||
Prepaid expenses | $ | 344 | $ | 623 | ||||||
Deferred financing costs | 295 | — | ||||||||
Deferred professional service costs | 275 | 252 | ||||||||
VAT tax receivable | 281 | 440 | ||||||||
Other current assets | 92 | 303 | ||||||||
Prepaids and other current assets | $ | 1,287 | $ | 1,618 | ||||||
Property and Equipment | ||||||||||
Property and equipment consist of the following (in thousands): | ||||||||||
Estimated | September 30, | December 31, | ||||||||
Useful Life | 2014 | 2013 | ||||||||
Property and equipment: | ||||||||||
Computer equipment | 3 years | $ | 3,945 | $ | 3,993 | |||||
Capitalized software and development | 2-5 years | 13,899 | 13,208 | |||||||
Furniture and fixtures | 5 years | 308 | 309 | |||||||
Leasehold improvements | Lease term | 110 | 123 | |||||||
18,262 | 17,633 | |||||||||
Accumulated depreciation and amortization | (17,375 | ) | (17,099 | ) | ||||||
Construction in process | 4 | 157 | ||||||||
Property and equipment, net | $ | 891 | $ | 691 | ||||||
Other Non-current Assets | ||||||||||
Other non-current assets consist of the following (in thousands): | ||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||
Other non-current assets: | ||||||||||
Credit card reserve deposits and other | $ | 95 | $ | 395 | ||||||
Deferred professional service costs | 824 | 445 | ||||||||
Other non-current assets | $ | 919 | $ | 840 | ||||||
Accounts Payable | ||||||||||
Approximately $12.9 million in accounts payable as of September 30, 2014 represents collections by the Company on behalf of software sales to third party customers associated with a customer's value added reseller arrangement. This balance is owed to the customer and the Company is currently negotiating a settlement arrangement on the balance due. As of September 30, 2014, included in accounts receivable is $447,000 associated with this customer. | ||||||||||
Other Accrued Liabilities | ||||||||||
Other accrued liabilities consist of the following (in thousands): | ||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||
Other accrued liabilities: | ||||||||||
Payable to customers * | $ | 1,344 | $ | 1,460 | ||||||
Accrued professional fees | 89 | 663 | ||||||||
VAT taxes payable | 270 | 248 | ||||||||
Settlement liability | — | 200 | ||||||||
Reseller rebates | — | 190 | ||||||||
Sales reserve | — | 117 | ||||||||
Other liabilities | 560 | 787 | ||||||||
Other accrued liabilities | $ | 2,263 | $ | 3,665 | ||||||
* - Amounts represent collections on customer receivables associated with "product sales" in excess of amounts owed to state jurisdictions. The Company is in the process of evaluating remediation plans for the balances due. | ||||||||||
Deferred Revenue and Deferred Professional Services Costs: | ||||||||||
In April 2013, the Company entered into an arrangement to provide subscription services and perform material modifications to its LMS platform for a significant customer. The Company received acceptance of the material modifications on July 18, 2014 and began to amortize the deferred costs and recognize revenue over the remaining subscription period of 50 months. | ||||||||||
As of September 30, 2014, the Company has recorded deferred revenue of $4.1 million of which $2.0 million is included in current deferred revenue and $2.1 million is included in noncurrent deferred revenue. The Company has also deferred related professional service costs incurred associated with the customization of the LMS platform of $1.1 million. Deferred professional service costs of $275,000 and $824,000 is included in prepaid and other current assets and other noncurrent assets, respectively, at September 30, 2014. |
NOTES_PAYABLE
NOTES PAYABLE | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
NOTES PAYABLE | ' | |||||||
NOTES PAYABLE | ||||||||
Notes payable consist of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Convertible notes, including accrued interest of $53 | $ | 3,143 | $ | — | ||||
Supplemental notes | 1,545 | — | ||||||
Discount | (4,457 | ) | — | |||||
Total convertible and supplemental notes | 231 | — | ||||||
Comerica term loan | $ | — | $ | 1,800 | ||||
Comerica revolving line | — | 1,230 | ||||||
Agility line of credit, net of discount of $0 and $96, respectively | — | 404 | ||||||
Revolving Line of Credit | 200 | — | ||||||
Notes payable – insurance | — | 207 | ||||||
Total notes payable | 200 | 3,641 | ||||||
2014 Convertible Notes Financing | ||||||||
On July 15, 2014, the Company entered into a Purchase Agreement with certain investors pursuant to which the Company agreed to issue units each consisting of (i) a secured convertible promissory note in the face amount of $1.00 (the “Convertible Notes”), (ii) a supplemental secured promissory note in the face amount of $0.50 (the “Supplemental Notes”) and (iii) warrants to purchase up to four shares of the Company’s common stock (the “Warrants”) (collectively, the “Financing Transaction”). | ||||||||
On July 15, 2014, the Company completed an initial closing of the Financing Transaction for the sale of 2,550,000 units, representing gross proceeds to the Company of $2,550,000 and net proceeds of approximately $2,275,000 after deducting fees and expenses payable by the Company. On August 12, 2014, the Company completed a secondary closing of the Financing Transaction for the sale of 450,000 units, representing gross proceeds to the Company of $450,000 and net proceeds of approximately $415,000. On September 9, 2014, the Company completed a third closing of the Financing Transaction for the sale of 90,000 units, representing gross proceeds of $90,000 and net proceeds of $83,700. The Company used a portion of the net proceeds from the Financing Transaction to repay its outstanding indebtedness owing to Comerica Bank and Agility Capital II, LLC and used the balance of the net proceeds for general corporate purposes, including working capital. | ||||||||
The Convertible Notes of $3.1 million will mature on July 15, 2019 and accrue interest at a fixed rate of 8.0% per annum payable quarterly. Interest accrued from the date of issuance through June 30, 2015 will be added to the principal amount of the Convertible Notes quarterly. During the continuance of an event of default, the Convertible Notes may accrue interest at a default rate of 15% per annum. Subject to stockholder approval of an increase in the number of authorized shares of the Company’s common stock in an amount sufficient to permit full conversion of the Convertible Notes, the Convertible Notes will be convertible into shares of the Company’s common stock at a conversion rate of $0.25 per share. The Convertible Notes also contain provisions that protect the holders thereof against dilution by adjustment of the conversion rate in certain events such as stock dividends, stock splits and other similar events and certain issuances of common stock by the Company at a price per share less than the conversion rate then in effect. | ||||||||
The Supplemental Notes of $1.5 million will mature on July 15, 2019 and accrue interest at a fixed rate of 8.0% per annum payable at maturity. During the continuance of an event of default, the Supplemental Notes may accrue interest at a default rate of 15% per annum. However, the Supplemental Notes can be canceled after two years if certain insolvency related events have been remediated. | ||||||||
The Convertible Notes and Supplemental Notes are secured by a first lien on substantially all of the Company’s consolidated assets. The Convertible Notes and Supplemental Notes contain covenants that will, subject to limited exceptions, require the approval of the holders of a majority of the outstanding principal amount thereof to, among other things, (i) incur other indebtedness; (ii) create liens; (iii) pay cash dividends; and (iv) merge or consolidate with another company. The Convertible Notes and Supplemental Notes also provide for customary events of default, including nonpayment, breach of covenants, material adverse events, payment defaults of other indebtedness and certain events of bankruptcy, insolvency and reorganization that may result in acceleration of outstanding amounts under the Convertible Notes and Supplemental Notes. If the Company is not able to comply with such covenants or if any event of default otherwise occurs, the outstanding note balances could become due and payable immediately. On November 6, 2014, we received a notice of default and acceleration from certain holders of our Convertible Notes and Supplemental Notes. See below under the heading “Events of Default - Convertible Notes, Supplemental Notes and Revolving Notes” for a further discussion of the notices of default and acceleration received under our debt agreements. | ||||||||
In connection with the Financing Transaction, the Company issued 12,360,000 Warrants which have an initial 10-year term with an exercise price of $0.08 per share. The Warrants are subject to stockholder approval of an increase in the number of authorized shares of the Company’s common stock in an amount sufficient to permit full exercise of the Warrants into shares of the Company's common stock. The Warrants may also be exercised by way of a cashless exercise. The Warrants also contain provisions that protect the holders thereof against dilution by adjustment of the exercise price and the number of shares issuable thereunder in certain events such as stock dividends, stock splits and other similar events and issuances of common stock at a price per share less than the exercise price then in effect. As such, the Company is required to record the warrants which do not have fixed settlement provisions as liabilities and mark to market at the end of each reporting period. | ||||||||
September 2014 Revolving Line of Credit Note | ||||||||
On September 2, 2014, the Company obtained $200,000 under Revolving Line of Credit Notes (the "Revolving Notes") from two investors in the Financing Transaction. The Revolving Notes are secured by a second lien on substantially all of the Company's consolidated assets. Outstanding principal accrues interest at a fixed rate of 5% per annum, payable quarterly starting December 31, 2014. During the continuance of an event of default, outstanding principal may accrue interest at a default rate of 7% per annum. Each advance must be paid within 30 days of the date of such advance. The Company borrowed the full $200,000 on the Revolving Notes on September 2, 2014 and this amount remained outstanding as of September 30, 2014. On November 6, 2014, we received a notice of default and acceleration from the holders of our Revolving Notes. See below under the heading “Events of Default - Convertible Notes, Supplemental Notes and Revolving Notes” for a further discussion of the notices of default and acceleration received under our debt agreements. | ||||||||
Events of Default - Convertible Notes, Supplemental Notes, and Revolving Notes | ||||||||
On November 6, 2014, the Company received a notice of default from investors holding the Revolving Notes. The notice of default stated that an event of default had occurred as a result of the Company’s failure to repay principal when due on October 2, 2014, and declared all principal and accrued interest outstanding under the Revolving Notes to be immediately due and payable. At November 6, 2014 accrued interest on the Revolving Notes was $2,176. | ||||||||
On November 6, 2014, the Company also received a notice of default from investors (the “Majority Investors”) holding $1.8 million of the outstanding principal amount of the Company’s Convertible Notes and $900,000 of the outstanding principal amount of the Company’s Supplemental Notes. The notice of default stated that an event of default had occurred under the Convertible Notes and Supplemental Notes as a result of the Company’s failure to repay the above-referenced Revolving Notes when due, and declared all principal and accrued interest outstanding under the Convertible Notes and Supplemental Notes held by the Majority Investors to be immediately due and payable. | ||||||||
On November 17, 2014, the Company received a notification of disposition of collateral from the collateral agent for the holders of the Convertible Notes and Supplemental Notes notifying the Company that a foreclosure sale of all or substantially all of the Company’s assets would take place on December 4, 2014. If the Majority Investors and collateral agent elect to proceed with the foreclosure sale of the Company’s assets, upon completion of such sale the Company would no longer be able to continue as a going concern and would immediately cease operations. The Majority Investors have represented to the Company that in the event of a foreclosure sale in which the Majority Investors acquire the Company’s assets, their intent would be to continue operating the ViewCentral business in a separate legal entity that continues existing contractual agreements with the Company’s ViewCentral customers. | ||||||||
Comerica Bank Credit Facility | ||||||||
On June 14, 2012, the Company entered into a Loan and Security Agreement with Comerica Bank (the "Comerica Credit Facility"). The maximum amount of credit available to the Company under the Comerica Credit Facility at inception was $5 million, comprised of a $3 million term loan facility ("Term Loan") and a $2 million revolving line of credit ("Revolving Line"), which included a $500,000 sub-facility for letters of credit and certain credit card services. The outstanding amount under the Term Loan was repaid by the Company in June 2014. Amounts borrowed under the Revolving Line became due on December 14, 2013, which was subsequently extended to May 1, 2014. The outstanding amount under the Revolving Line of $998,000 was repaid by the Company on July 15, 2014 and the Comerica Credit Facility was terminated. However, Comerica continues to maintain a cash-secured letter of credit in the face amount of $61,000 issued to our landlord for our leased headquarters in Campbell, California. | ||||||||
Agility Capital Credit Facility | ||||||||
On October 30, 2013, the Company closed a Loan Agreement (the "Agility Loan Agreement") with Agility Capital II, LLC (“Agility”), providing for a revolving line of credit of up to $500,000, which amount could be increased to $650,000 under certain conditions (the “Maximum Revolving Line”). The Agility Loan Agreement became due on December 14, 2013, commensurate with the Comerica Credit Facility, which was subsequently extended to May 1, 2014, commensurate with the extension of the scheduled maturity date of the Comerica Revolving Line. The outstanding amount under the Agility Loan Agreement of $432,000 was repaid by the Company on July 15, 2014, and the Agility Loan Agreement was terminated. | ||||||||
Notes Payable – Insurance | ||||||||
On December 11, 2013, the Company entered into an agreement with AON Private Risk Management to finance our 2013 to 2014 insurance premiums with First Insurance Funding Corp. in the amount of $237,000. The interest rate on the note payable was 4.99% and the note was payable in eight equal monthly installment payments beginning in December 2013. The outstanding balance of the note payable was repaid in June 2014. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | |
Litigation | |
On February 8, 2013, the Company's former Chief Executive Officer, Michael Silton, filed a demand for arbitration and complaint with the American Arbitration Association, alleging breach of contract and other causes of action relating to the termination of Mr. Silton's employment with the Company in October 2012. Mr. Silton sought full payment of severance benefits in the amount of approximately $1.0 million, plus compensation for unused vacation, related penalties and punitive damages. On March 21, 2013, the Company filed a responsive pleading in the arbitration proceedings. On May 15, 2013, the American Arbitration Association appointed an arbitrator. Thereafter, Mr. Silton withdrew his arbitration claim and on May 22, 2013, filed a complaint against the Company in the Santa Clara Superior Court. The allegations and causes of action were the same as the complaint filed with the American Arbitration Association. On July 5, 2013, the Company filed an answer to Mr. Silton's complaint and a cross-complaint against Mr. Silton. On or about August 1, 2013, Mr. Silton filed an answer to the cross-complaint. Between July and December 2013, the parties served and responded to written discovery requests and produced documents. In January 2014, the parties agreed to proceed to mediation. On January 28, 2014, the parties reached a settlement at mediation and executed a confidential settlement agreement. Pursuant to the settlement agreement, and in exchange for a release of claims, Mr. Silton received a payment from the Company's insurer and 1,000,000 shares of the Company's common stock, which were issued during the three months ended March 31, 2014. A portion of the payment and the shares of common stock was paid to Mr. Silton's legal counsel. After effectuating the terms of the settlement, the case was formally dismissed on March 17, 2014. In connection with the settlement agreement, the Company recorded a charge of $200,000 in the year ended December 31, 2013. | |
On July 9, 2013, YKnot Holdings LLC (“YKnot”) filed a complaint seeking damages against the Company in the Santa Clara Superior Court alleging breach of contract and related causes of action arising from the eCommerce Processor Agreement (the “Agreement”) entered into by YKnot and the Company in January 2012. The central allegation in the complaint alleged that the Company failed to timely pay over certain reserves held by the Company against chargebacks and returns relating to YKnot's products in accordance with the Agreement. On August 12, 2013, the Company filed an answer to the complaint and filed a cross-complaint against YKnot. In January 2014, the parties agreed to proceed to mediation. On January 28, 2014, the parties reached a settlement at mediation and executed a settlement agreement pursuant to which the Company and YKnot agreed to a mutual "walk away" settlement and release with no money or other consideration paid to either party. | |
On September 29, 2014, the Company received a complaint filed against the Company by Symantec Corporation (“Symantec”) in the Superior Court of California, Santa Clara County, alleging breach of contract arising from the Master Services Agreement entered into by the Company and Symantec in June 2006, the statement of work entered into by the parties in June 2008 and the Online Store Agreement for SMB and Midmarket Businesses entered into by the parties in June 2010. In the complaint Symantec seeks payment of unpaid amounts thereunder in the approximate amount of $12.4 million, plus interest and attorneys’ fees and costs. | |
From time to time in the ordinary course of business, we are subject to other claims, asserted or unasserted, or named as a party to other lawsuits or investigations. We are not aware of any such asserted or unasserted legal proceedings or claims that we believe would have a material adverse effect on our financial condition or results of operations. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||
FAIR VALUE MEASUREMENTS | ||||||||||||
A summary of the activity of the fair value of the Level 3 liabilities (common stock warrant liability and derivative liability conversion option) for the nine months ended September 30, 2014 and 2013 is as follows (in thousands): | ||||||||||||
Nine Months Ended | ||||||||||||
September 30, | ||||||||||||
2014 | 2013 | |||||||||||
Balance at December 31, 2013 and 2012, respectively | $ | 93 | $ | 348 | ||||||||
Issuances | — | — | ||||||||||
Gain on fair value remeasurement | (17 | ) | (225 | ) | ||||||||
Balance at March 31, 2014 and 2013, respectively | 76 | 123 | ||||||||||
Issuances | — | — | ||||||||||
Loss on fair value remeasurement | — | 11 | ||||||||||
Balance at June 30, 2014 and 2013, respectively | 76 | 134 | ||||||||||
Issuances | 3,589 | — | ||||||||||
(Gain) loss on fair value remeasurement | (1,267 | ) | 66 | |||||||||
Balance at September 30, 2014 and 2013, respectively | $ | 2,398 | $ | 200 | ||||||||
The following table represents the fair value hierarchy for our financial assets and liabilities held by the Company measured at fair value on a recurring basis (in thousands): | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
September 30, 2014 | ||||||||||||
Liabilities: | ||||||||||||
Common stock warrant liability (2) | $ | — | $ | — | $ | 1,446 | ||||||
Derivative liability conversion option | $ | — | $ | — | $ | 952 | ||||||
December 31, 2013 | ||||||||||||
Assets: | ||||||||||||
Money market funds (1) | $ | 1,641 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Common stock warrant liability (2) | $ | — | $ | — | $ | 93 | ||||||
____________ | ||||||||||||
-1 | Money market funds are valued using active quoted market rates. | |||||||||||
-2 | The fair value of our common stock warrant liability is determined using the Black–Scholes valuation method utilizing the quoted price of our common stock in an active market. Volatility is estimated based on the historical market activity of our stock. The expected life is based on the remaining contractual term of the warrants and the risk free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrants' remaining contractual term. See detailed inputs below. | |||||||||||
The Company uses the Black-Scholes model to value the common stock warrant liability and the derivative liability conversion option. The following are the assumptions used to measure the warrant liability at September 30, 2014 and 2013 and at date of issuance, which were determined in a manner consistent with that described for stock option awards as set forth in Note 8: | ||||||||||||
30-Sep-14 | At Issuance | September 30, 2013 | ||||||||||
2011 Warrants | 2013 Warrants | 2014 Warrants | 2014 Warrants | 2011 Warrants | ||||||||
Number of shares underlying the Warrants | 1,578,000 | 217,000 | 12,360,000 | 12,360,000 | 1,578,000 | |||||||
Exercise price | $1.05 - $1.40 | $0.45 | $0.08 | $0.08 | $1.05 - $1.40 | |||||||
Remaining contractual life in years | 1.75 | 6.08 | 9.8 | 10 | 2.75 | |||||||
Volatility | 144.30% | 108.25% | 107.35% | 107.35% | 85% | |||||||
Risk-free interest rate | 0.58% | 2.00% | 2.64% | 2.57% | 0.63% | |||||||
Expected dividend yield | —% | —% | —% | —% | —% | |||||||
Closing price of common stock | $0.12 | $0.12 | $0.12 | $0.10 - $0.19 | ||||||||
The following are the assumptions used to measure the derivative liability conversion option with respect to the convertible notes payable at September 30, 2014 and at date of issuance: | ||||||||||||
30-Sep-14 | At Issuance | |||||||||||
Number of shares underlying the conversion option feature | 12,570,400 | 12,360,000 | ||||||||||
Conversion price | $0.25 | $0.25 | ||||||||||
Remaining contractual life in years | 4.75 | 5 | ||||||||||
Volatility | 100.57% | 100.57% | ||||||||||
Risk-free interest rate | 1.78% | 1.70% | ||||||||||
Expected dividend yield | — | — | ||||||||||
Closing price of common stock | $0.12 | $0.10 - $0.19 | ||||||||||
The amounts reported as cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities at September 30, 2014 and December 31, 2013 approximate fair value due to their short-term maturities. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||
STOCKHOLDERS' EQUITY | ' | |||||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||||
Treasury Stock | ||||||||||||||||
During the nine months ended September 30, 2014, the Company had restricted stock awards that vested. The Company is required to withhold income taxes at statutory rates based on the closing market value of the vested shares on the date of vesting. Accordingly, the Company offers employees the ability to have vested shares withheld in an amount equal to the amount of taxes to be withheld. The Company purchased 23,057 shares during the nine months ended September 30, 2014 with a cost of approximately $5,000 from employees to cover federal and state taxes due. | ||||||||||||||||
During the nine months ended September 30, 2014, the Company issued 1,000,000 shares from treasury pursuant to the settlement agreement with our former CEO, Michael Silton. The weighted cost of shares issued from treasury was approximately $1.3 million of which $200,000 was recorded as a reduction of other accrued liabilities and the remaining $1.1 million was recorded as a reduction of additional paid-in capital. | ||||||||||||||||
Stock Compensation | ||||||||||||||||
The Company expenses stock-based compensation to the same expense categories in which the respective award grantee’s salary expense is reported. The table below reflects stock-based compensation expense for the three and nine months ended September 30, 2014 and 2013 (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||
Cost of services | $ | 15 | $ | 24 | $ | 55 | $ | 57 | ||||||||
Sales and marketing | 17 | 15 | 54 | 136 | ||||||||||||
Technology and development | 2 | 59 | 35 | 157 | ||||||||||||
General and administrative | 10 | 126 | 147 | 1,002 | ||||||||||||
$ | 44 | $ | 224 | $ | 291 | $ | 1,352 | |||||||||
At September 30, 2014, approximately $834,000 of stock-based compensation expense relating to unvested awards had not been amortized and will be expensed in future periods through 2016. Under current grants that are unvested and outstanding, approximately $30,000 will be expensed in the remainder of 2014 as stock-based compensation, subject to true-up adjustments for forfeitures and vestings during the year. | ||||||||||||||||
During the nine months ended September 30, 2014 and 2013, the weighted average valuation assumptions for stock option awards and forfeiture rates used for the expense calculations for stock option and restricted stock awards were as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Expected life in years | 4.39 | 3.94 | ||||||||||||||
Volatility | 93.12 | % | 75.16 | % | ||||||||||||
Risk-free interest rate | 1.57 | % | 0.5 | % | ||||||||||||
Dividend rate | — | % | — | % | ||||||||||||
Forfeiture Rates: | ||||||||||||||||
Options | 21.89 | % | 21.66 | % | ||||||||||||
Restricted stock | — | % | 15.9 | % | ||||||||||||
Expected life of option grants is estimated based on an analysis of actual historical option exercises and cancellations. Expected stock price volatility is based on the historical volatility from traded shares of the Company's stock over the most recent period of time equal to the expected term of the options. The risk-free interest rate is based on the rate of a zero-coupon U.S. Treasury instrument with a remaining term approximately equal to the expected term. The Company has not historically paid dividends, and does not expect to pay dividends in the near term. Therefore the dividend rate has been set to zero. | ||||||||||||||||
A summary of activity under the 2003 Stock Incentive Plan (the "2003 Plan") and 2012 Equity Inducement Plan (the "2012 Plan") for the nine months ended September 30, 2014 is as follows (in thousands): | ||||||||||||||||
Options Outstanding | ||||||||||||||||
Available | Number of | Weighted | Weighted Average Remaining Contractual Term | |||||||||||||
for Grant | Options | Average | ||||||||||||||
Exercise | ||||||||||||||||
Price | ||||||||||||||||
Balance at December 31, 2013 | 1,534 | 2,698 | $ | 0.67 | 8.7 years | |||||||||||
Authorized | 1,660 | — | ||||||||||||||
Options granted | (60 | ) | 60 | 0.22 | ||||||||||||
Restricted stock awards granted | (100 | ) | — | |||||||||||||
Options exercised | — | — | ||||||||||||||
Options canceled | 1,409 | (1,409 | ) | 0.6 | ||||||||||||
Restricted stock awards forfeited | 315 | — | ||||||||||||||
Balance at September 30, 2014 | 4,758 | 1,349 | $ | 0.73 | 6.8 years | |||||||||||
Exercisable at September 30, 2014 | 706 | $ | 0.99 | 5.1 years | ||||||||||||
In accordance with the 2003 Plan, the number of shares authorized for grant under the 2003 Plan automatically increases on the first trading date of January by an amount equal to the lesser of 4% of the outstanding common stock at the previous December 31 or 2,000,000 shares. Shares outstanding at December 31, 2013 were 41,495,000 and the additional shares authorized amounted to 1,660,000 under the 2003 Plan. | ||||||||||||||||
The following table summarizes the activity with regard to restricted stock awards during the nine months ended September 30, 2014. Restricted stock awards were issued from the 2003 Plan and any issuances reduce the shares available for grant as indicated in the previous table. During the three months ended September 30, 2014, the Company granted restricted stock awards for 100,000 shares to two members of our board of directors with immediate vesting. Restricted stock awards are valued at the closing market price of our stock on the date of the grant (in thousands). | ||||||||||||||||
Number of | Weighted Average | |||||||||||||||
Shares | Grant Price | |||||||||||||||
Balance of nonvested shares at December 31, 2013 | 582 | $ | 0.69 | |||||||||||||
Granted | 100 | 0.25 | ||||||||||||||
Vested | (311 | ) | 0.51 | |||||||||||||
Forfeited | (315 | ) | 0.69 | |||||||||||||
Balance of nonvested shares at September 30, 2014 | 56 | $ | 0.89 | |||||||||||||
The total grant date fair value of the nonvested restricted stock awards was $50,000 as of September 30, 2014. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | |
Subsequent events have been evaluated through the date that the financial statements were issued. All appropriate subsequent event disclosures, if any, have been made in the notes to the financial statements. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Sep. 30, 2014 | |
Restructuring and Related Activities [Abstract] | ' |
RESTRUCTURING | ' |
RESTRUCTURING | |
Effective July 15, 2014, Donald Massaro resigned as President and Chief Executive Officer of the Company. Effective July 15, 2014, Bradford Peppard agreed to resign as Executive Vice President and Chief Financial Officer of the Company; this resignation became effective September 12, 2014. | |
In connection with Mr. Massaro’s separation from the Company, the Company and Mr. Massaro entered into a Settlement Agreement and General Release. Pursuant to the agreement, Mr. Massaro is entitled to a severance payment in accordance with his employment contract of $221,250, which is equal to nine (9) months base salary, payable in accordance with the Company’s normal payroll schedule. As of September 30, 2014, $175,866 of this amount remained outstanding. | |
In connection with Mr. Peppard's separation from the Company, the Company intends to pay Mr. Peppard a severance payment in accordance with his employment contract in the amount of $125,000, which is equal to six (6) months base salary. Payment would be made in six (6) monthly payments beginning in January 2015. | |
In September, 2014, the Company decided to close its Godalming (UK) office. The Company occupied premises at this location under a lease agreement that ends March 1, 2015. As part of its decision to close this office, the Company recorded a charge of $19,138 representing amounts owed on the lease from October 1, 2014 to the end of the lease. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
The accompanying condensed consolidated financial statements include the accounts of Rainmaker Systems, Inc. and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. | |
Basis of Presentation | ' |
Basis of Presentation | |
The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The interim financial statements are unaudited but reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of the results of these periods. | |
The results of our operations for the three and nine months ended September 30, 2014 are not necessarily indicative of results to be expected for the year ending December 31, 2014, or any other period. These consolidated financial statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 ("2013 Form 10-K"), as filed with the SEC on April 1, 2014. Balance sheet information as of December 31, 2013 has been derived from the audited financial statements for the year then ended. | |
Reclassifications | ' |
Reclassifications | |
Certain reclassifications have been made to the prior year's condensed consolidated statements of comprehensive loss to conform to the current year presentation. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Our estimates are based on historical experience, input from sources outside of the Company, and other relevant facts and circumstances. Actual results could differ materially from those estimates. Accounting policies that include particularly significant estimates are revenue recognition and presentation policies, valuation of accounts receivable, measurement of our deferred tax asset and the corresponding valuation allowance, commitments and contingencies, fair value estimates for the expense of employee stock options, embedded derivative features and warrants and the assessment of recoverability and impairment long-lived assets. | |
Recent Accounting Standards | ' |
Recent Accounting Standards | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements. | |
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. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on the condensed consolidated financial statements. |
NET_LOSS_PER_SHARE_Tables
NET LOSS PER SHARE (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Calculation of basic and diluted net loss per common share | ' | |||||||||||||||
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net loss from continuing operations | $ | (1,807 | ) | $ | (3,587 | ) | $ | (6,669 | ) | $ | (9,999 | ) | ||||
Net income (loss) from discontinued operations | — | (34 | ) | — | 53 | |||||||||||
Net loss | $ | (1,807 | ) | $ | (3,621 | ) | (6,669 | ) | (9,946 | ) | ||||||
Weighted-average shares of common stock outstanding – basic and diluted | 41,891 | 40,684 | 41,980 | 35,566 | ||||||||||||
Basic and diluted net income (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.09 | ) | $ | (0.16 | ) | $ | (0.28 | ) | ||||
Discontinued operations | — | — | — | — | ||||||||||||
Net loss | $ | (0.04 | ) | $ | (0.09 | ) | $ | (0.16 | ) | $ | (0.28 | ) | ||||
Schedule of antidilutive securities excluded from computation of earnings per share | ' | |||||||||||||||
The following table presents the unvested restricted stock awards and "in the money" stock options and stock warrants that were excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2014 and 2013 as these securities were anti-dilutive (in thousands). | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Unvested restricted stock awards | 377 | 1,963 | ||||||||||||||
Stock options | 1 | 131 | ||||||||||||||
Stock warrants | 1,937 | — | ||||||||||||||
Total anti-dilutive securities | 2,315 | 2,094 | ||||||||||||||
BALANCE_SHEET_COMPONENTS_Table
BALANCE SHEET COMPONENTS (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Balance Sheet Related Disclosures [Abstract] | ' | |||||||||
Components of prepaids and other current assets | ' | |||||||||
Prepaids and other current assets consist of the following (in thousands): | ||||||||||
September 30, | December 31, | |||||||||
2014 | 2013 | |||||||||
Prepaids and other current assets: | ||||||||||
Prepaid expenses | $ | 344 | $ | 623 | ||||||
Deferred financing costs | 295 | — | ||||||||
Deferred professional service costs | 275 | 252 | ||||||||
VAT tax receivable | 281 | 440 | ||||||||
Other current assets | 92 | 303 | ||||||||
Prepaids and other current assets | $ | 1,287 | $ | 1,618 | ||||||
Components of property and equipment | ' | |||||||||
Property and equipment consist of the following (in thousands): | ||||||||||
Estimated | September 30, | December 31, | ||||||||
Useful Life | 2014 | 2013 | ||||||||
Property and equipment: | ||||||||||
Computer equipment | 3 years | $ | 3,945 | $ | 3,993 | |||||
Capitalized software and development | 2-5 years | 13,899 | 13,208 | |||||||
Furniture and fixtures | 5 years | 308 | 309 | |||||||
Leasehold improvements | Lease term | 110 | 123 | |||||||
18,262 | 17,633 | |||||||||
Accumulated depreciation and amortization | (17,375 | ) | (17,099 | ) | ||||||
Construction in process | 4 | 157 | ||||||||
Property and equipment, net | $ | 891 | $ | 691 | ||||||
Schedule of other non-current assets | ' | |||||||||
Other non-current assets consist of the following (in thousands): | ||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||
Other non-current assets: | ||||||||||
Credit card reserve deposits and other | $ | 95 | $ | 395 | ||||||
Deferred professional service costs | 824 | 445 | ||||||||
Other non-current assets | $ | 919 | $ | 840 | ||||||
Schedule of other accrued liabilities | ' | |||||||||
Other accrued liabilities consist of the following (in thousands): | ||||||||||
30-Sep-14 | 31-Dec-13 | |||||||||
Other accrued liabilities: | ||||||||||
Payable to customers * | $ | 1,344 | $ | 1,460 | ||||||
Accrued professional fees | 89 | 663 | ||||||||
VAT taxes payable | 270 | 248 | ||||||||
Settlement liability | — | 200 | ||||||||
Reseller rebates | — | 190 | ||||||||
Sales reserve | — | 117 | ||||||||
Other liabilities | 560 | 787 | ||||||||
Other accrued liabilities | $ | 2,263 | $ | 3,665 | ||||||
* - Amounts represent collections on customer receivables associated with "product sales" in excess of amounts owed to state jurisdictions. The Company is in the process of evaluating remediation plans for the balances due. |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Components of long-term debt | ' | |||||||
Notes payable consist of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Convertible notes, including accrued interest of $53 | $ | 3,143 | $ | — | ||||
Supplemental notes | 1,545 | — | ||||||
Discount | (4,457 | ) | — | |||||
Total convertible and supplemental notes | 231 | — | ||||||
Comerica term loan | $ | — | $ | 1,800 | ||||
Comerica revolving line | — | 1,230 | ||||||
Agility line of credit, net of discount of $0 and $96, respectively | — | 404 | ||||||
Revolving Line of Credit | 200 | — | ||||||
Notes payable – insurance | — | 207 | ||||||
Total notes payable | 200 | 3,641 | ||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||
Summary of the activity of the fair value of the Level 3 liabilities | ' | |||||||||||
A summary of the activity of the fair value of the Level 3 liabilities (common stock warrant liability and derivative liability conversion option) for the nine months ended September 30, 2014 and 2013 is as follows (in thousands): | ||||||||||||
Nine Months Ended | ||||||||||||
September 30, | ||||||||||||
2014 | 2013 | |||||||||||
Balance at December 31, 2013 and 2012, respectively | $ | 93 | $ | 348 | ||||||||
Issuances | — | — | ||||||||||
Gain on fair value remeasurement | (17 | ) | (225 | ) | ||||||||
Balance at March 31, 2014 and 2013, respectively | 76 | 123 | ||||||||||
Issuances | — | — | ||||||||||
Loss on fair value remeasurement | — | 11 | ||||||||||
Balance at June 30, 2014 and 2013, respectively | 76 | 134 | ||||||||||
Issuances | 3,589 | — | ||||||||||
(Gain) loss on fair value remeasurement | (1,267 | ) | 66 | |||||||||
Balance at September 30, 2014 and 2013, respectively | $ | 2,398 | $ | 200 | ||||||||
Fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis | ' | |||||||||||
The following table represents the fair value hierarchy for our financial assets and liabilities held by the Company measured at fair value on a recurring basis (in thousands): | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
September 30, 2014 | ||||||||||||
Liabilities: | ||||||||||||
Common stock warrant liability (2) | $ | — | $ | — | $ | 1,446 | ||||||
Derivative liability conversion option | $ | — | $ | — | $ | 952 | ||||||
December 31, 2013 | ||||||||||||
Assets: | ||||||||||||
Money market funds (1) | $ | 1,641 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Common stock warrant liability (2) | $ | — | $ | — | $ | 93 | ||||||
____________ | ||||||||||||
-1 | Money market funds are valued using active quoted market rates. | |||||||||||
-2 | The fair value of our common stock warrant liability is determined using the Black–Scholes valuation method utilizing the quoted price of our common stock in an active market. Volatility is estimated based on the historical market activity of our stock. The expected life is based on the remaining contractual term of the warrants and the risk free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrants' remaining contractual term. See detailed inputs below. | |||||||||||
Assumptions used to measure the accrued warrant liability and embedded derivative feature liability | ' | |||||||||||
The following are the assumptions used to measure the warrant liability at September 30, 2014 and 2013 and at date of issuance, which were determined in a manner consistent with that described for stock option awards as set forth in Note 8: | ||||||||||||
30-Sep-14 | At Issuance | September 30, 2013 | ||||||||||
2011 Warrants | 2013 Warrants | 2014 Warrants | 2014 Warrants | 2011 Warrants | ||||||||
Number of shares underlying the Warrants | 1,578,000 | 217,000 | 12,360,000 | 12,360,000 | 1,578,000 | |||||||
Exercise price | $1.05 - $1.40 | $0.45 | $0.08 | $0.08 | $1.05 - $1.40 | |||||||
Remaining contractual life in years | 1.75 | 6.08 | 9.8 | 10 | 2.75 | |||||||
Volatility | 144.30% | 108.25% | 107.35% | 107.35% | 85% | |||||||
Risk-free interest rate | 0.58% | 2.00% | 2.64% | 2.57% | 0.63% | |||||||
Expected dividend yield | —% | —% | —% | —% | —% | |||||||
Closing price of common stock | $0.12 | $0.12 | $0.12 | $0.10 - $0.19 | ||||||||
The following are the assumptions used to measure the derivative liability conversion option with respect to the convertible notes payable at September 30, 2014 and at date of issuance: | ||||||||||||
30-Sep-14 | At Issuance | |||||||||||
Number of shares underlying the conversion option feature | 12,570,400 | 12,360,000 | ||||||||||
Conversion price | $0.25 | $0.25 | ||||||||||
Remaining contractual life in years | 4.75 | 5 | ||||||||||
Volatility | 100.57% | 100.57% | ||||||||||
Risk-free interest rate | 1.78% | 1.70% | ||||||||||
Expected dividend yield | — | — | ||||||||||
Closing price of common stock | $0.12 | $0.10 - $0.19 |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||
Stock-based compensation expense | ' | |||||||||||||||
The table below reflects stock-based compensation expense for the three and nine months ended September 30, 2014 and 2013 (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||
Cost of services | $ | 15 | $ | 24 | $ | 55 | $ | 57 | ||||||||
Sales and marketing | 17 | 15 | 54 | 136 | ||||||||||||
Technology and development | 2 | 59 | 35 | 157 | ||||||||||||
General and administrative | 10 | 126 | 147 | 1,002 | ||||||||||||
$ | 44 | $ | 224 | $ | 291 | $ | 1,352 | |||||||||
Weighted average valuation assumptions for stock option awards and forfeiture rates used for the expense calculations for stock option and restricted stock awards | ' | |||||||||||||||
During the nine months ended September 30, 2014 and 2013, the weighted average valuation assumptions for stock option awards and forfeiture rates used for the expense calculations for stock option and restricted stock awards were as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Expected life in years | 4.39 | 3.94 | ||||||||||||||
Volatility | 93.12 | % | 75.16 | % | ||||||||||||
Risk-free interest rate | 1.57 | % | 0.5 | % | ||||||||||||
Dividend rate | — | % | — | % | ||||||||||||
Forfeiture Rates: | ||||||||||||||||
Options | 21.89 | % | 21.66 | % | ||||||||||||
Restricted stock | — | % | 15.9 | % | ||||||||||||
Summary of activity under equity incentive plan | ' | |||||||||||||||
A summary of activity under the 2003 Stock Incentive Plan (the "2003 Plan") and 2012 Equity Inducement Plan (the "2012 Plan") for the nine months ended September 30, 2014 is as follows (in thousands): | ||||||||||||||||
Options Outstanding | ||||||||||||||||
Available | Number of | Weighted | Weighted Average Remaining Contractual Term | |||||||||||||
for Grant | Options | Average | ||||||||||||||
Exercise | ||||||||||||||||
Price | ||||||||||||||||
Balance at December 31, 2013 | 1,534 | 2,698 | $ | 0.67 | 8.7 years | |||||||||||
Authorized | 1,660 | — | ||||||||||||||
Options granted | (60 | ) | 60 | 0.22 | ||||||||||||
Restricted stock awards granted | (100 | ) | — | |||||||||||||
Options exercised | — | — | ||||||||||||||
Options canceled | 1,409 | (1,409 | ) | 0.6 | ||||||||||||
Restricted stock awards forfeited | 315 | — | ||||||||||||||
Balance at September 30, 2014 | 4,758 | 1,349 | $ | 0.73 | 6.8 years | |||||||||||
Exercisable at September 30, 2014 | 706 | $ | 0.99 | 5.1 years | ||||||||||||
Summary of restricted stock award activity | ' | |||||||||||||||
The following table summarizes the activity with regard to restricted stock awards during the nine months ended September 30, 2014. Restricted stock awards were issued from the 2003 Plan and any issuances reduce the shares available for grant as indicated in the previous table. During the three months ended September 30, 2014, the Company granted restricted stock awards for 100,000 shares to two members of our board of directors with immediate vesting. Restricted stock awards are valued at the closing market price of our stock on the date of the grant (in thousands). | ||||||||||||||||
Number of | Weighted Average | |||||||||||||||
Shares | Grant Price | |||||||||||||||
Balance of nonvested shares at December 31, 2013 | 582 | $ | 0.69 | |||||||||||||
Granted | 100 | 0.25 | ||||||||||||||
Vested | (311 | ) | 0.51 | |||||||||||||
Forfeited | (315 | ) | 0.69 | |||||||||||||
Balance of nonvested shares at September 30, 2014 | 56 | $ | 0.89 | |||||||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Nov. 06, 2014 | Sep. 30, 2014 | Jul. 15, 2014 | Dec. 31, 2013 | Nov. 06, 2014 | Sep. 30, 2014 | Jul. 15, 2014 | Dec. 31, 2013 | Nov. 06, 2014 | |
Revolving line of credit | Revolving line of credit | Revolving line of credit | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | |||||||
Subsequent event | Revolving line of credit | Convertible notes | Convertible notes | Convertible notes | Supplemental notes | Supplemental notes | Supplemental notes | Supplemental notes | |||||||||
Subsequent event | Subsequent event | ||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes payable | $200,000 | ' | $200,000 | ' | $3,641,000 | ' | $200,000 | $0 | ' | $200,000 | ' | ' | ' | ' | ' | ' | ' |
Total convertible and supplemental notes | 231,000 | ' | 231,000 | ' | 0 | ' | ' | ' | ' | ' | 3,143,000 | 0 | ' | 1,545,000 | 1,545,000 | 0 | ' |
Accrued interest | ' | ' | ' | ' | ' | ' | ' | ' | 2,176 | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,800,000 | ' | ' | ' | 900,000 |
Net loss from continuing operations | -1,807,000 | -3,587,000 | -6,669,000 | -9,999,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net cash used in operating activities from continuing operations | ' | ' | -2,374,000 | -2,938,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Working capital deficit | -19,200,000 | ' | -19,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | 170,000 | 4,166,000 | 170,000 | 4,166,000 | 3,633,000 | 4,494,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts receivable | 1,262,000 | ' | 1,262,000 | ' | 3,554,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts payable | 15,581,000 | ' | 15,581,000 | ' | 13,042,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accounts payable related to merchant account of customer | $12,900,000 | ' | $12,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
NET_LOSS_PER_SHARE_Basic_and_D
NET LOSS PER SHARE - Basic and Diluted Net Loss Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net loss from continuing operations | ($1,807) | ($3,587) | ($6,669) | ($9,999) |
Net income (loss) from discontinued operations | 0 | -34 | 0 | 53 |
Net loss | ($1,807) | ($3,621) | ($6,669) | ($9,946) |
Weighted-average shares of common stock outstanding – basic and diluted | 41,891 | 40,684 | 41,980 | 35,566 |
Basic and diluted net income (loss) per share: | ' | ' | ' | ' |
Continuing operations (USD per share) | ($0.04) | ($0.09) | ($0.16) | ($0.28) |
Discontinued operations (USD per share) | $0 | $0 | $0 | $0 |
Net loss (USD per share) | ($0.04) | ($0.09) | ($0.16) | ($0.28) |
NET_LOSS_PER_SHARE_Antidilutiv
NET LOSS PER SHARE - Antidilutive Securities (Details) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Total anti-dilutive securities | 4,237 | 1,650 | 2,315 | 2,094 |
Stock options and warrants not in the money | 4,100 | 2,879 | 4,100 | 2,879 |
Unvested restricted stock awards | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Total anti-dilutive securities | 132 | 1,571 | 377 | 1,963 |
Stock options | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Total anti-dilutive securities | 0 | 79 | 1 | 131 |
Stock warrants | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Total anti-dilutive securities | 4,105 | 0 | 1,937 | 0 |
CUSTOMER_CONCENTRATION_Details
CUSTOMER CONCENTRATION (Details) (Customer concentration risk) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Sales revenue, services, net | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | |
Microsoft Corporation | Microsoft Corporation | Microsoft Corporation | Microsoft Corporation | Symantec Corporation | Symantec Corporation | Symantec Corporation | Symantec Corporation | Verizon Communications | Verizon Communications | Verizon Communications | Verizon Communications | Hewlett-Packard Company | Hewlett-Packard Company | Hewlett-Packard Company | Hewlett-Packard Company | N3 | Microsoft Corporation | Microsoft Corporation | Symantec Corporation | Symantec Corporation | Hewlett-Packard Company | Hewlett-Packard Company | Splunk Inc. | Splunk Inc. | |
Concentration Risk [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration risk percentage | 38.00% | 42.00% | 52.00% | 41.00% | 0.00% | 26.00% | 0.00% | 25.00% | 14.00% | 0.00% | 11.00% | 0.00% | 12.00% | 12.00% | 0.00% | 10.00% | 20.00% | 17.00% | 25.00% | 36.00% | 40.00% | 11.00% | 11.00% | 15.00% | 0.00% |
BALANCE_SHEET_COMPONENTS_Prepa
BALANCE SHEET COMPONENTS - Prepaids and Other Current Assets (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Balance Sheet Related Disclosures [Abstract] | ' | ' |
Prepaid expenses | $344 | $623 |
Deferred financing costs | 295 | 0 |
Deferred professional service costs | 275 | 252 |
VAT tax receivable | 281 | 440 |
Other current assets | 92 | 303 |
Prepaids and other current assets | $1,287 | $1,618 |
BALANCE_SHEET_COMPONENTS_Prope
BALANCE SHEET COMPONENTS - Property and Equipment (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Components of property and equipment: | ' | ' |
Property and equipment, gross | $18,262 | $17,633 |
Accumulated depreciation and amortization | -17,375 | -17,099 |
Construction in process | 4 | 157 |
Property and equipment, net | 891 | 691 |
Computer equipment | ' | ' |
Property and equipment: | ' | ' |
Useful life of property and equipment | '3 years | ' |
Components of property and equipment: | ' | ' |
Property and equipment, gross | 3,945 | 3,993 |
Capitalized software and development | ' | ' |
Components of property and equipment: | ' | ' |
Property and equipment, gross | 13,899 | 13,208 |
Capitalized software and development | Minimum | ' | ' |
Property and equipment: | ' | ' |
Useful life of property and equipment | '2 years | ' |
Capitalized software and development | Maximum | ' | ' |
Property and equipment: | ' | ' |
Useful life of property and equipment | '5 years | ' |
Furniture and fixtures | ' | ' |
Property and equipment: | ' | ' |
Useful life of property and equipment | '5 years | ' |
Components of property and equipment: | ' | ' |
Property and equipment, gross | 308 | 309 |
Leasehold improvements | ' | ' |
Components of property and equipment: | ' | ' |
Property and equipment, gross | $110 | $123 |
BALANCE_SHEET_COMPONENTS_Other
BALANCE SHEET COMPONENTS - Other Non-current Assets (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Balance Sheet Related Disclosures [Abstract] | ' | ' |
Credit card reserve deposits and other | $95 | $395 |
Deferred professional service costs | 824 | 445 |
Other non-current assets | $919 | $840 |
BALANCE_SHEET_COMPONENTS_Accou
BALANCE SHEET COMPONENTS - Accounts Payable and Other Accrued Liabilities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Balance Sheet Related Disclosures [Line Items] | ' | ' | ||
Accounts payable | $15,581 | $13,042 | ||
Accounts receivable | 1,262 | 3,554 | ||
Payable to customers | 1,344 | [1] | 1,460 | [1] |
Accrued professional fees | 89 | 663 | ||
VAT taxes payable | 270 | 248 | ||
Settlement liability | 0 | 200 | ||
Reseller rebates | 0 | 190 | ||
Sales reserve | 0 | 117 | ||
Other liabilities | 560 | 787 | ||
Other accrued liabilities | 2,263 | 3,665 | ||
Collections of software sales due to customer | ' | ' | ||
Balance Sheet Related Disclosures [Line Items] | ' | ' | ||
Accounts payable | 12,900 | ' | ||
Accounts receivable | $447 | ' | ||
[1] | Amounts represent collections on customer receivables associated with "product sales" in excess of amounts owed to state jurisdictions. The Company is in the process of evaluating remediation plans for the balances due. |
BALANCE_SHEET_COMPONENTS_Defer
BALANCE SHEET COMPONENTS - Deferred Revenue and Deferred Professional Service Costs (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Subscription Services of LMSP | Subscription Services of LMSP | Subscription Services of LMSP | |||
Prepaid and other current assets | Other noncurrent assets | ||||
Balance Sheet Related Disclosures [Line Items] | ' | ' | ' | ' | ' |
Remaining subscription period | ' | ' | '50 months | ' | ' |
Deferred revenue | ' | ' | $4,100,000 | ' | ' |
Current deferred revenue | 2,027,000 | 1,965,000 | 2,000,000 | ' | ' |
Noncurrent deferred revenue | 2,135,000 | 1,629,000 | 2,100,000 | ' | ' |
Deferred professional service costs | $275,000 | $252,000 | $1,100,000 | $275,000 | $824,000 |
NOTES_PAYABLE_Longterm_Debt_De
NOTES PAYABLE - Long-term Debt (Details) (USD $) | Sep. 30, 2014 | Jul. 15, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Debt Instrument [Line Items] | ' | ' | ' |
Total convertible and supplemental notes | $231 | ' | $0 |
Discount | -4,457 | ' | 0 |
Total notes payable | 200 | ' | 3,641 |
Revolving credit facility | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total notes payable | 200 | ' | 0 |
Secured promissory notes | Revolving credit facility | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total notes payable | 200 | ' | ' |
Secured promissory notes | Convertible notes | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total convertible and supplemental notes | ' | 3,143 | 0 |
Secured promissory notes | Supplemental notes | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total convertible and supplemental notes | 1,545 | 1,545 | 0 |
Secured debt | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Discount | -53 | ' | ' |
Secured debt | Comerica Bank | Comerica Bank credit facility | Term loan | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total notes payable | 0 | ' | 1,800 |
Secured debt | Comerica Bank | Comerica Bank credit facility | Revolving credit facility | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total notes payable | 0 | ' | 1,230 |
Line of credit | Agility Capital II, LLC | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total notes payable | 0 | ' | 404 |
Notes payable, other payables | AON Private Risk Management | Notes payable - insurance | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Total notes payable | $0 | ' | $207 |
NOTES_PAYABLE_2014_Convertible
NOTES PAYABLE - 2014 Convertible Notes Financing (Details) (USD $) | 0 Months Ended | 0 Months Ended | |||||||||||||
Sep. 09, 2014 | Aug. 12, 2014 | Jul. 15, 2014 | Jul. 15, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Jul. 15, 2014 | Jul. 15, 2014 | Dec. 31, 2013 | Nov. 06, 2014 | Jul. 15, 2014 | Sep. 30, 2014 | Jul. 15, 2014 | Dec. 31, 2013 | Nov. 06, 2014 | |
unit | unit | unit | Maximum | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | Secured promissory notes | ||||
Convertible notes | Convertible notes | Convertible notes | Supplemental notes | Supplemental notes | Supplemental notes | Supplemental notes | Supplemental notes | ||||||||
Subsequent event | Subsequent event | ||||||||||||||
Debt Conversion [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Face amount per unit (USD per unit) | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | 0.5 | ' | ' |
Number of shares that can be purchased | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of units sold | 90,000 | 450,000 | 2,550,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from sale of units | $90,000 | $450,000 | $2,550,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from sale of units, net | 83,700 | 415,000 | 2,275,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total convertible and supplemental notes | ' | ' | ' | ' | 231,000 | 0 | ' | 3,143,000 | 0 | ' | ' | 1,545,000 | 1,545,000 | 0 | ' |
Stated interest rate | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' | ' | ' | ' | 8.00% | ' | ' |
Debt default, interest rate | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | 15.00% | ' | ' |
Conversion price | ' | ' | ' | ' | $0.25 | ' | ' | $0.25 | ' | ' | ' | ' | ' | ' | ' |
Cancellation period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | ' | ' | ' |
Number of shares underlying the warrants | ' | ' | ' | 12,360,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Initial term of the warrants | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price | ' | ' | ' | 0.08 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,800,000 | ' | ' | ' | ' | $900,000 |
NOTES_PAYABLE_September_2014_R
NOTES PAYABLE - September 2014 Revolving Line of Credit Note (Details) (Revolving line of credit, USD $) | 0 Months Ended | ||
Sep. 02, 2014 | Sep. 02, 2014 | Nov. 06, 2014 | |
investor | Subsequent event | ||
Line of Credit Facility [Line Items] | ' | ' | ' |
Maximum borrowing capacity | ' | $200,000 | ' |
Number of investors | ' | 2 | ' |
Fixed interest rate | 5.00% | ' | ' |
Debt default, interest rate | ' | 7.00% | ' |
Period to repay advance | '30 days | ' | ' |
Amount borrowed | 200,000 | ' | ' |
Accrued interest | ' | ' | $2,176 |
NOTES_PAYABLE_Comerica_Bank_Cr
NOTES PAYABLE - Comerica Bank Credit Facility (Details) (USD $) | Sep. 02, 2014 | Jun. 14, 2012 | Jun. 14, 2012 | 1-May-14 | Jun. 14, 2012 | Jun. 14, 2012 |
Revolving credit facility | Comerica Bank | Comerica Bank | Comerica Bank | Comerica Bank | Comerica Bank | |
Comerica Bank credit facility | Comerica Bank credit facility | Comerica Bank credit facility | Comerica Bank credit facility | Comerica Bank credit facility | ||
Secured debt | Secured debt | Secured debt | Secured debt | Secured debt | ||
Term loan | Revolving credit facility | Revolving credit facility | Letter of credit | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | $200,000 | $5,000,000 | $3,000,000 | ' | $2,000,000 | $500,000 |
Revolving line, outstanding amount | ' | ' | ' | 998,000 | ' | ' |
Cash-secured letter of credit issued to landlord | ' | ' | ' | ' | ' | $61,000 |
NOTES_PAYABLE_Agility_Capital_
NOTES PAYABLE - Agility Capital Credit Facility (Details) (Agility, USD $) | Sep. 30, 2014 | Oct. 30, 2013 |
Agility | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Current borrowing capacity | ' | $500,000 |
Maximum borrowing capacity | ' | 650,000 |
Notes payable | $432,000 | ' |
NOTES_PAYABLE_Notes_Payable_In
NOTES PAYABLE - Notes Payable Insurance (Details) (AON Private Risk Management, Notes payable, other payables, Notes payable - insurance, USD $) | Dec. 11, 2013 |
In Thousands, unless otherwise specified | installments |
AON Private Risk Management | Notes payable, other payables | Notes payable - insurance | ' |
Debt Instrument [Line Items] | ' |
Notes payable | $237 |
Stated interest rate | 4.99% |
Number of monthly installments of principal | 8 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Feb. 08, 2013 | Jan. 28, 2014 | Dec. 31, 2013 | Sep. 29, 2014 |
In Millions, except Share data, unless otherwise specified | Breach of employment contract | Breach of employment contract | Breach of employment contract | Breach of contract [Member] |
Threatened litigation | Settled litigation | Settled litigation | Pending litigation | |
Litigation: | ' | ' | ' | ' |
Stock issued during period (in shares) | ' | 1,000,000 | ' | ' |
Litigation charge | ' | ' | $0.20 | ' |
Estimate of possible loss | $1 | ' | ' | $12.40 |
FAIR_VALUE_MEASUREMENTS_Unobse
FAIR VALUE MEASUREMENTS - Unobservable Input Reconciliation (Details) (Level 3, USD $) | 3 Months Ended | |||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 |
Level 3 | ' | ' | ' | ' | ' | ' |
Summary of the activity of the fair value of the Level 3 liabilities: | ' | ' | ' | ' | ' | ' |
Balance at beginning of period | $76 | $76 | $93 | $134 | $123 | $348 |
Transfers in (out) | 3,589 | 0 | 0 | 0 | 0 | 0 |
Loss on fair value remeasurement | -1,267 | 0 | -17 | 66 | 11 | -225 |
Balance at end of period | $2,398 | $76 | $76 | $200 | $134 | $123 |
FAIR_VALUE_MEASUREMENTS_Fair_V
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy on Recurring Basis (Details) (Measured at fair value on a recurring basis, USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Level 1 | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Common stock warrant liability | $0 | [1] | $0 | [1] |
Derivative liability conversion option | 0 | ' | ||
Level 1 | Money market funds | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Money market funds | ' | 1,641 | [2] | |
Level 2 | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Common stock warrant liability | 0 | [1] | 0 | [1] |
Derivative liability conversion option | 0 | ' | ||
Level 2 | Money market funds | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Money market funds | ' | 0 | [2] | |
Level 3 | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Common stock warrant liability | 1,446 | [1] | 93 | [1] |
Derivative liability conversion option | 952 | ' | ||
Level 3 | Money market funds | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' | ||
Money market funds | ' | $0 | [2] | |
[1] | The fair value of our common stock warrant liability is determined using the Black–Scholes valuation method utilizing the quoted price of our common stock in an active market. Volatility is estimated based on the historical market activity of our stock. The expected life is based on the remaining contractual term of the warrants and the risk free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the warrants' remaining contractual term. See detailed inputs below. | |||
[2] | Money market funds are valued using active quoted market rates. |
FAIR_VALUE_MEASUREMENTS_Assump
FAIR VALUE MEASUREMENTS - Assumptions (Details) (USD $) | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||||
Sep. 30, 2014 | Jul. 15, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
At Issuance | 2011 Warrants | 2011 Warrants | 2011 Warrants | 2011 Warrants | 2011 Warrants | 2011 Warrants | 2013 Warrants | 2014 Warrants | 2014 Warrants | 2014 Warrants | 2014 Warrants | |||
Minimum | Minimum | Maximum | Maximum | At Issuance | At Issuance | At Issuance | ||||||||
Minimum | Maximum | |||||||||||||
Fair value measurements: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares underlying the Warrants | ' | 12,360,000 | ' | 1,578,000 | 1,578,000 | ' | ' | ' | ' | 217,000 | 12,360,000 | 12,360,000 | ' | ' |
Exercise price | ' | 0.08 | ' | ' | ' | 1.05 | 1.05 | 1.4 | 1.4 | 0.45 | 0.08 | 0.08 | ' | ' |
Number of shares underlying the conversion option feature | 12,570,000 | ' | 12,360,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion price | $0.25 | ' | $0.25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Remaining contractual life in years | '4 years 9 months | ' | '5 years 0 months | '1 year 9 months | '2 years 9 months | ' | ' | ' | ' | '6 years 1 month | '9 years 9 months | '10 years 0 months | ' | ' |
Volatility | 100.57% | ' | 100.57% | 144.30% | 84.60% | ' | ' | ' | ' | 108.25% | 107.35% | 107.35% | ' | ' |
Risk-free interest rate | 1.78% | ' | 1.70% | 0.58% | 0.63% | ' | ' | ' | ' | 2.00% | 2.64% | 2.57% | ' | ' |
Expected dividend yield | 0.00% | ' | 0.00% | 0.00% | 0.00% | ' | ' | ' | ' | 0.00% | 0.00% | 0.00% | ' | ' |
Closing price of common stock | $0.12 | ' | ' | $0.12 | ' | ' | ' | ' | ' | $0.12 | $0.12 | ' | $0.10 | $0.19 |
STOCKHOLDERS_EQUITY_Treasury_S
STOCKHOLDERS' EQUITY - Treasury Stock (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Class of Stock [Line Items] | ' | ' |
Payments related to tax witholding | $5,000 | $132,000 |
Treasury stock issued, shares | 1,000,000 | ' |
Weighted cost of shares issued from treasury | 1,300,000 | ' |
Other accrued liabilities | ' | ' |
Class of Stock [Line Items] | ' | ' |
Weighted cost of shares issued from treasury | 200,000 | ' |
Additional paid-in capital | ' | ' |
Class of Stock [Line Items] | ' | ' |
Weighted cost of shares issued from treasury | 1,100,000 | ' |
Common stock | ' | ' |
Class of Stock [Line Items] | ' | ' |
Shares paid for tax witholding | 23,057 | ' |
Payments related to tax witholding | $5,000 | ' |
STOCKHOLDERS_EQUITY_Allocation
STOCKHOLDERS' EQUITY - Allocation of Share-based Compensation Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | $44 | $224 | $291 | $1,352 |
Cost of services | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | 15 | 24 | 55 | 57 |
Sales and marketing | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | 17 | 15 | 54 | 136 |
Technology and development | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | 2 | 59 | 35 | 157 |
General and administrative | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | $10 | $126 | $147 | $1,002 |
STOCKHOLDERS_EQUITY_Valuation_
STOCKHOLDERS' EQUITY - Valuation Assumptions (Details) | 9 Months Ended | 12 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Options | Options | Restricted stock | Restricted stock | |||
Share-based Compensation Arrangements: | ' | ' | ' | ' | ' | ' |
Expected life in years | '6 years 10 months 6 days | '8 years 8 months 12 days | '4 years 4 months 20 days | '3 years 11 months 10 days | ' | ' |
Volatility | ' | ' | 93.12% | 75.16% | ' | ' |
Risk-free interest rate | ' | ' | 1.57% | 0.50% | ' | ' |
Dividend rate | ' | ' | 0.00% | 0.00% | ' | ' |
Forfeiture rate | ' | ' | 21.89% | 21.66% | 0.00% | 15.90% |
STOCKHOLDERS_EQUITY_Options_Ac
STOCKHOLDERS' EQUITY - Options Activity (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Available for Grant | ' | ' |
Balance at beginning of period (in shares) | 1,533,516 | ' |
Authorized (in shares) | 1,659,781 | ' |
Options granted (in shares) | -60,000 | ' |
Restricted stock awards granted (in shares) | -100,000 | ' |
Options canceled (in shares) | 1,408,690 | ' |
Restricted stock awards forfeited (in shares) | 315,000 | ' |
Balance at end of period (in shares) | 4,758,000 | 1,533,516 |
Number of Options | ' | ' |
Balance at beginning of period (in shares) | 2,698,310 | ' |
Options granted (in shares) | 60,000 | ' |
Options exercised (in shares) | 0 | ' |
Options canceled (in shares) | -1,408,690 | ' |
Balance at end of period (in shares) | 1,349,000 | 2,698,310 |
Exercisable at end of period (in shares) | 706,311 | ' |
Weighted Average Exercise Price | ' | ' |
Balance at beginning of period (USD per share) | $0.67 | ' |
Options granted (USD per share) | $0.22 | ' |
Options exercised (USD per share) | ' | ' |
Options canceled (USD per share) | $0.60 | ' |
Balance at end of perido (USD per share) | $0.73 | $0.67 |
Exercisable at end of period (USD per share) | $0.99 | ' |
Weighted Average Remaining Contractual Term | ' | ' |
Balance at beginning of period | '6 years 10 months 6 days | '8 years 8 months 12 days |
Balance at end of period | '6 years 10 months 6 days | '8 years 8 months 12 days |
Exercisable at end of period | '5 years 1 month 20 days | ' |
STOCKHOLDERS_EQUITY_Restricted
STOCKHOLDERS' EQUITY - Restricted Stock Activity (Details) (Restricted stock, USD $) | 9 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 |
Restricted stock | ' |
Number of Shares | ' |
Balance at beginning of period (in shares) | 581,875 |
Granted (in shares) | 100,000 |
Vested (in shares) | -311,250 |
Forfeited (in shares) | -315,000 |
Balance at end of period (in shares) | 56,000 |
Weighted Average Grant Price | ' |
Balance at beginning of period (USD per share) | $0.69 |
Granted (USD per share) | $0.25 |
Vested (USD per share) | $0.51 |
Forfeited (USD per share) | $0.69 |
Balance at end of period (USD per share) | $0.89 |
Fair value of nonvested awards | $50 |
STOCKHOLDERS_EQUITY_Stock_Comp
STOCKHOLDERS' EQUITY - Stock Compensation Narrative (Details) (USD $) | 9 Months Ended | 3 Months Ended | 12 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 |
Members of the Board | Members of the Board | 2003 Plan | 2003 Plan | 2003 Plan | ||
Restricted stock | Common stock | Common stock | ||||
board_director_members | Maximum | |||||
Share-based Compensation Arrangements: | ' | ' | ' | ' | ' | ' |
Stock-based compensation relating to unvested awards | $834 | ' | ' | ' | ' | ' |
Current unvested and outstanding grants expected to be expensed in current year | $30 | ' | ' | ' | ' | ' |
Percentage limit to annual increase in total shares authorized | ' | ' | ' | ' | ' | 4.00% |
Limit to annual increase in total shares authroized (in shares) | ' | ' | ' | ' | 2,000,000 | ' |
Shares outstanding | ' | ' | ' | 41,495,000 | ' | ' |
Authorized (in shares) | 1,659,781 | ' | ' | 1,660,000 | ' | ' |
Restricted stock awards granted in period (in shares) | ' | 100,000 | ' | ' | ' | ' |
Number of board of director members | ' | ' | 2 | ' | ' | ' |
RESTRUCTURING_Details
RESTRUCTURING (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | 1 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jul. 15, 2014 | Sep. 30, 2014 | Jul. 15, 2014 | Sep. 30, 2014 | |
Employee severance | Employee severance | Employee severance | Office closing | |||||
President and Chief Executive Officer | President and Chief Executive Officer | Executive Vice President and Chief Financial Officer | ||||||
monthly_payment | ||||||||
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Restructuring expense | $365,000 | $0 | $365,000 | $0 | $221,250 | ' | $125,000 | $19,138 |
Period for base salary calculation | ' | ' | ' | ' | '9 months | ' | '6 months | ' |
Number of monthly payments | ' | ' | ' | ' | ' | ' | 6 | ' |
Amount outstanding | ' | ' | ' | ' | ' | $175,866 | ' | ' |