Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 30, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | SPHERIX INC | ||
Entity Central Index Key | 12,239 | ||
Document Type | 10-K | ||
Trading Symbol | SPEX | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | Yes | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 7,676,802 | ||
Entity Common Stock, Shares Outstanding | 4,943,929 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 134 | $ 142 |
Marketable securities | 6,025 | 3,392 |
Prepaid expenses and other assets | 135 | 330 |
Total current assets | 6,294 | 3,864 |
Property and equipment, net | 6 | 5 |
Patent portfolios and patent rights, net | 4,951 | 9,799 |
Deposit | 26 | 26 |
Total assets | 11,277 | 13,694 |
Current liabilities | ||
Accounts payable and accrued expenses | 123 | 384 |
Accrued salaries and benefits | 446 | 645 |
Warrant liabilities | 702 | 2,959 |
Short-term deferred revenue | 1,216 | 290 |
Short-term lease liabilities | 183 | 178 |
Total current liabilities | 2,670 | 4,456 |
Long-term deferred revenue | 3,245 | 259 |
Long-term lease liabilities | 44 | 229 |
Total liabilities | 5,959 | 4,944 |
Stockholders' equity | ||
Preferred stock | ||
Common stock, $0.0001 par value, 100,000,000 shares authorized; 2,539,859 and 1,505,773 shares issued at December 31, 2015 and December 31, 2014, respectively; 2,539,847 and 1,505,761 shares outstanding at December 31, 2015 and December 31, 2014, respectively | ||
Additional paid-in-capital | 147,331 | 144,287 |
Treasury stock, at cost, 12 shares at December 31, 2016 and December 31, 2015 | (264) | (264) |
Accumulated deficit | (141,749) | (135,273) |
Total stockholders' equity | 5,318 | 8,750 |
Total liabilities and stockholders' equity | $ 11,277 | $ 13,694 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 4,943,941 | 2,539,859 |
Common stock, shares outstanding | 4,943,929 | 2,539,847 |
Treasury stock, shares | 12 | 12 |
Series I Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series D Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 4,725 | 4,725 |
Preferred stock, shares outstanding | 4,725 | 4,725 |
liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series D-1 Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 834 | 834 |
Preferred stock, shares outstanding | 834 | 834 |
liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series F-1 Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series H Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 381,967 | 439,043 |
Preferred stock, shares outstanding | 381,967 | 439,043 |
liquidation preference (in dollars per share) | $ 83.50 | $ 83.50 |
Series J Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 |
Series K Convertible Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 1,240 | 1,240 |
Preferred stock, shares outstanding | 1,240 | 1,240 |
liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Revenues | $ 877 | $ 33 |
Operating costs and expenses | ||
Amortization of patent portfolio | 2,135 | 6,317 |
Compensation and related expenses (including stock-based compensation) | 1,950 | 1,724 |
Professional fees | 2,293 | 2,780 |
Impairment of goodwill and intangible assets | 2,713 | 40,600 |
Rent | 84 | 88 |
Other selling, general and administrative | 253 | 534 |
Total operating expenses | 9,428 | 52,043 |
Loss from operations | (8,551) | (52,010) |
Other income (expenses) | ||
Other (expenses) income, net | (182) | 276 |
Change in fair value of warrant liabilities | 2,257 | 269 |
Total other income | 2,075 | 545 |
Net loss | (6,476) | (51,465) |
Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock | (323) | |
Deemed capital contribution on extinguishment of preferred stock | 31,480 | 9,485 |
Net income (loss) attributable to common stockholders | $ 25,004 | $ (42,303) |
Net income (loss) per share attributable to common stockholders, basic and diluted | ||
Basic (in dollars per share) | $ 6.76 | $ (24.98) |
Diluted (in dollars per share) | $ 6.51 | $ (24.98) |
Weighted average number of common shares outstanding, | ||
Basic (in shares) | 3,700,090 | 1,693,365 |
Diluted (in shares) | 3,838,366 | 1,693,365 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Total |
Beginning Balance at Dec. 31, 2014 | $ 137,658 | $ (264) | $ (83,808) | $ 53,586 | ||
Beginning Balance (in shares) at Dec. 31, 2014 | 1,505,761 | 444,603 | 12 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance common shares in July Financing, net of offering cost | 337 | 337 | ||||
Issuance common shares in July Financing, net of offering cost (in shares) | 301,026 | |||||
Issuance of common stock and Series K convertible preferred stock in December Offering, net of offering cost | 1,202 | 1,202 | ||||
Issuance of common stock and Series K convertible preferred stock in December Offering, net of offering cost (in shares) | 726,315 | 1,240 | ||||
Beneficial conversion feature of Series K convertible preferred stock | 323 | 323 | ||||
Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock | (323) | (323) | ||||
Extinguishment of Series H convertible preferred stock and deemed capital contribution | (4,766) | (4,766) | ||||
Extinguishment of Series H convertible preferred stock and deemed capital contribution (in shares) | (57,076) | |||||
Deemed capital contribution on extinguishment of preferred stock | 9,485 | 9,485 | ||||
Cancellation of Series C preferred stock | ||||||
Cancellation of Series C preferred stock (in shares) | (1) | |||||
Fractional shares adjusted for reverse split | ||||||
Fractional shares adjusted for reverse split (in shares) | (117) | |||||
Stock-based compensation | 371 | 371 | ||||
Stock-based compensation (in shares) | 6,862 | |||||
Net Loss | (51,465) | (51,465) | ||||
Ending Balance at Dec. 31, 2015 | 144,287 | $ (264) | (135,273) | 8,750 | ||
Ending Balance (in shares) at Dec. 31, 2015 | 2,539,847 | 388,766 | 12 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Conversion of Series K preferred stock to common stock | ||||||
Conversion of Series K preferred stock to common stock (in shares) | 326,315 | (1,240) | ||||
Beneficial conversion feature of Series K convertible preferred stock | 695 | 695 | ||||
Deemed dividend on conversion of Series K convertible preferred stock to common stock | (695) | (695) | ||||
Extinguishment of Series H convertible preferred stock and deemed capital contribution | (414) | (414) | ||||
Extinguishment of Series H convertible preferred stock and deemed capital contribution (in shares) | (381,967) | |||||
Deemed capital contribution on extinguishment of preferred stock | 31,480 | |||||
Fractional shares adjusted for reverse split | (4) | (4) | ||||
Fractional shares adjusted for reverse split (in shares) | (1,675) | |||||
Warrant Exercise | 760 | 760 | ||||
Warrant Exercise (in shares) | 200,000 | |||||
Issuance common stock in equity raise, net of offering cost | 2,140 | 2,140 | ||||
Issuance common stock in equity raise, net of offering cost (in shares) | 1,592,357 | |||||
Stock-based compensation | 562 | 562 | ||||
Stock-based compensation (in shares) | 287,085 | |||||
Net Loss | (6,476) | (6,476) | ||||
Ending Balance at Dec. 31, 2016 | $ 147,331 | $ (264) | $ (141,749) | $ 5,318 | ||
Ending Balance (in shares) at Dec. 31, 2016 | 4,943,929 | 5,559 | 12 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (6,476) | $ (51,465) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization of patent portfolio | 2,135 | 6,317 |
Change in fair value of warrant liabilities | (2,257) | (269) |
Stock-based compensation | 562 | 371 |
Depreciation expenses | 3 | 1 |
Realized loss on marketable securities | 95 | |
Unrealized (gain) loss on marketable securities | 243 | (19) |
Impairment of goodwill and intangible assets | 2,713 | 40,600 |
Changes in assets and liabilities: | ||
Prepaid expenses and other assets | 195 | (223) |
Accounts payable and accrued expenses | (261) | (344) |
Accrued salaries and benefits | (199) | 316 |
Deferred revenue | 3,497 | 268 |
Accrued lease liabilities | (180) | (173) |
Net cash provided by (used in) operating activities | 70 | (4,620) |
Cash flows from investing activities | ||
Purchase of marketable securities | (18,035) | (7,994) |
Purchase of property and equipment | (4) | (2) |
Sale of marketable securities | 15,065 | 8,121 |
Net cash (used in) provided by investing activities | (2,974) | 125 |
Cash flows from financing activities | ||
Proceeds from issuance of common stock and warrants in July Financing, net | 1,322 | |
Proceeds from issuance of common stock and preferred stock in December Offering, net | 3,445 | |
Cash paid for cancellation of fractional shares of common stock | (4) | |
Cash from issuance common stock, net of offering cost | 2,140 | |
Proceeds from exercise of warrants | 760 | |
Redemption of Series I redeemable convertible preferred stock | (935) | |
Net cash provided by financing activities | 2,896 | 3,832 |
Net decrease in cash and cash equivalents | (8) | (663) |
Cash and cash equivalents, beginning of period | 142 | 805 |
Cash and cash equivalents, end of period | 134 | 142 |
Cash paid for interest and taxes | ||
Non-cash investing and financing activities | ||
Extinguishment of Series H Convertible Preferred Stock in connection with license agreement | 31,480 | 4,766 |
Recognition of deferred revenue in connection with license agreement | 414 | 281 |
Extinguishment of Series I Convertible Preferred Stock in connection with license agreement | $ 5,000 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Note 1. Organization and Description of Business Organization and Description of Business Spherix Incorporated (the “Company”) is an intellectual property company incorporated in the State of Delaware that owns patented and unpatented intellectual property. The Company was formed in 1967 as a scientific research company and for much of its history pursued drug development including through Phase III clinical studies which were discontinued. Through the Company’s acquisition of patents and patent applications developed by Nortel Networks Corporation from Rockstar Consortium US, LP (“Rockstar”) and Harris Corporation from North South Holdings Inc. (“North South”) in 2013, the Company has expanded its activities. The Company is a patent commercialization company focused on generating revenues from the monetization of intellectual property, or IP. Such monetization includes, but is not limited to, acquiring IP from patent holders in order to maximize the value of the patent holdings by conducting and managing a licensing campaign, or through the settlement and litigation of patents. We intend to generate revenues and related cash flows from the granting of intellectual property rights for the use of patented technologies that we own, that we manage for others, or that others manage on our behalf. To date, we have generated minimal revenues and no assurance can be provided that our business model will be successful. The Company continually works to enhance its portfolio of intellectual property through acquisition and strategic partnerships. The Company’s mission is to partner with inventors, or other entities, who own undervalued intellectual property. The Company then works with the inventors or other entities to commercialize the IP. In March 2016, the Company entered into an agreement (which was subsequently amended in April and May 2016) with Equitable IP Corporation (“Equitable”) to facilitate the monetization of its patents (the “Monetization Agreement”). Pursuant to the Monetization Agreement, the Company is working together with Equitable to further develop and revise its ongoing litigation plan. See Note 4 for additional details surrounding the Monetization Agreement. Reverse Stock Split and Amendment to Certificate of Incorporation The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “SPEX.” One of the requirements for continued listing on the NASDAQ Capital Market is maintenance of a minimum closing bid price of $1.00 per share. On March 24, 2015, the Company received a letter (the “Notice”) from the Listing Qualifications Staff of The NASDAQ Stock Market LLC (“NASDAQ”) notifying the Company that, based upon the closing bid price of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) for the 30 consecutive business days preceding receipt of such letter, the Common Stock had no longer met the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in NASDAQ Listing Rule 5550(a)(2). In accordance with NASDAQ’s Listing Rule 5810(c)(3)(A), the Company initially had a period of 180 calendar days, or until September 21, 2015, to regain compliance with the Rule. After determining that it would not be in compliance with the Rule by September 21, 2015, the Company notified NASDAQ and applied for an extension of the cure period, as permitted under the original notification. In accordance with NASDAQ Listing Rule 5810(c)(3)(A), NASDAQ granted a second grace period of 180 calendar days, or until March 21, 2016, to regain compliance with the minimum closing bid price requirement for continued listing. On February 26, 2016, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation and authorized the Company’s Board of Directors to effect a reverse stock split of Common Stock at a ratio in the range of 1-for-12 to 1-for-24. The Company implemented this reverse stock split on March 4, 2016 with a ratio of 1-for-19 (the “Reverse Stock Split”). No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive a fractional share in connection with the Reverse Stock Split received a cash payment in lieu thereof. The par value and other terms of the common stock were not affected by the Reverse Stock Split. In addition, the amendment to the Company’s certificate of incorporation that effected the Reverse Stock Split also simultaneously reduced the number of authorized shares of Common Stock from 200,000,000 to 100,000,000. The Company’s Common Stock began trading at its post-Reverse Stock Split price at the beginning of trading on March 4, 2016. On March 18, 2016, the Company received a letter from NASDAQ indicating that it had regained compliance with the minimum bid price requirement under NASDAQ Listing Rule 5550(a)(2) for continued listing on The NASDAQ Capital Market. The Company’s common stock continues to be listed on the NASDAQ Capital Market. Immediately following the Reverse Stock Split, the number of outstanding shares of Common Stock were reduced from 48,259,430 shares to 2,539,847. All per share amounts and outstanding shares of Common Stock including stock options, restricted stock and warrants, have been retroactively adjusted in these consolidated financial statements for all periods presented to reflect the 1-for-19 Reverse Stock Split. Further, exercise prices of stock options and warrants have been retroactively adjusted in these consolidated financial statements for all periods presented to reflect the 1-for-19 Reverse Stock Split. Numbers of shares of the Company’s preferred stock were not affected by the Reverse Stock Split; however, the conversion ratios have been adjusted to reflect the Reverse Stock Split. |
Liquidity and Financial Conditi
Liquidity and Financial Condition | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Liquidity and Financial Condition | Note 2. Liquidity and Financial Condition The Company continues to incur ongoing administrative and other expenses, including public company expenses, in excess of corresponding (non-financing related) revenue. While the Company continues to implement its business strategy, it intends to finance its activities through: ● managing current cash and cash equivalents on hand from the Company’s past debt and equity offerings, ● seeking additional funds raised through the sale of additional securities in the future, ● seeking additional liquidity through credit facilities or other debt arrangements, and ● increasing revenue from its patent portfolios, license fees and new business ventures. Management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months. The Company’s ultimate success is dependent on its ability to obtain additional financing and generate sufficient cash flow to meet its obligations on a timely basis. The Company’s business will require significant amounts of capital to sustain operations and make the investments it needs to execute its longer term business plan. The Company’s working capital amounted to approximately $3.6 million at December 31, 2016, and net loss amounted to approximately $6.5 million and $51.5 million for the years ended December 31, 2016 and 2015, respectively. The Company had an approximately $141.7 million of accumulated deficit as of December 31, 2016. Absent generation of sufficient revenue from the execution of the Company’s long term business plan, the Company will need to obtain additional debt or equity financing, especially if the Company experiences downturns in its business that are more severe or longer than anticipated, or if the Company experiences significant increases in expense levels resulting from being a publicly-traded company or operations. If the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available to the Company on favorable terms, or at all. Disputes regarding the assertion of patents and other intellectual property rights are highly complex and technical. The Company may be forced to litigate against others to enforce or defend its intellectual property rights or to determine the validity and scope of other parties’ proprietary rights. The defendants or other third parties involved in the lawsuits in which the Company is involved may allege defenses and/or file counterclaims or initiate inter parties reviews in an effort to avoid or limit liability and damages for patent infringement or cause the Company to incur additional costs as a strategy. If such efforts are successful, they may have an impact on the value of the patents and preclude the Company from deriving revenue from the patents. The patents could be declared invalid by a court or the United States Patent and Trademark Office, in whole or in part, or the costs of the Company can increase. Recent rulings also create an increased risk that if the Company is unsuccessful in litigation it could be responsible to pay the attorneys’ fees and other costs of defendants by lowering the standard for legal fee shifting sought by defendants in patent cases. Public Underwriting On August 8, 2016, the Company closed on an underwritten public offering of 1,592,357 shares of the Company’s common stock at a price to the public of $1.57 per share (the “Offering Price”). Under the terms of the Underwriting Agreement, the Company granted the representative of the underwriters a 30-day option to purchase up to 231,349 additional shares of its common stock (the 30-day underwriters option expired unexercised). The net proceeds to the Company were $2.1 million, after deducting the underwriting discount and other estimated offering expenses payable by the Company. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Nuta Technology Corp. (“Nuta”), Spherix Portfolio Acquisition II, Inc. (“SPXII”), Guidance IP, LLC (“Guidance”), Directional IP, LLC (“Directional”), Spherix Management Services, LLC (“SMS”) and NNPT, LLC (“NNPT”). All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. Segments The Company operates in one operating segment and, accordingly, no segment disclosures have been presented herein. Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. As of December 31, 2016 and 2015, the Company had $0.1 million in cash and cash equivalents. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. Marketable Securities Marketable securities are classified as trading and are carried at fair value. The Company’s marketable securities consist of corporate bonds and highly liquid mutual funds and exchange-traded & closed-end funds which are valued at quoted market prices. During the year ended December 31, 2016 and 2015, the Company incurred realized losses of approximately $95,000 and $91,000, respectively, and unrealized loss of approximately $243,000 and unrealized gains of approximately $19,000, respectively, on its investments in marketable securities, which are included in other income, net on the consolidated statements of operations. In addition, during the year ended December 31, 2016 and 2015, the Company earned dividend income of approximately $19,000 and $52,000, respectively, which is included in other income, net on the consolidated statement of operations. The Company reinvested such dividend income into its marketable securities during the years ended December 31, 2016 and 2015. The market value of marketable securities held as of December 31, 2016 and 2015 were $6.0 million and $3.4 million, respectively. Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) Property and Equipment Property and equipment are stated at cost and include office furniture and equipment and computer hardware and software. The Company computes depreciation and amortization under the straight-line method and typically over the following estimated useful lives of the related assets: ● Office furniture and equipment 3 to 10 years ● Computer hardware and software 3 to 5 years Impairment of Long-lived Assets (Including Patent Assets) The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If a change in circumstance occurs, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets for which the Company can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, the Company measures any impairment by comparing the fair value of the asset or asset group to its carrying value. The Company determined it was necessary to test its intangible assets for impairment during the second quarter of 2015. Due to the decline in stock price which the Company considered a triggering event, at December 31, 2015, the Company performed an additional impairment test for intangible assets. During the year ended December 31, 2015, the Company recorded a $38.9 million of impairment charges to its intangible assets. Due to the continuous decline in stock price during 2016, the Company performed an additional impairment test for intangible assets at December 31, 2016 and recorded $2.7 million of impairment charges to its intangible assets (see Note 5). Convertible Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity. The Company accounts for convertible preferred stock with detachable warrants in accordance with ASC 470: Debt The Company has also evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging As the convertible preferred stock may be converted immediately, the Company recognized the BCF as a deemed dividend in the consolidated statements of operations. Treasury Stock The Company accounts for the treasury stock using the cost method, which treats it as a reduction in stockholders’ equity. Goodwill Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that indicate the carrying amount may be impaired. Accounting Standards Codification (“ASC”) Topic 350 provides an entity with the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. If the two-step impairment test is necessary, a fair-value-based test is applied at the reporting unit level, which is generally one level below the operating segment level. The test compares the fair value of an entity's reporting units to the carrying value of those reporting units. This test requires various judgments and estimates. The Company estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit. An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired. The Company tests goodwill for impairment at least annually in conjunction with the preparation of its annual business plan, or more frequently if events or circumstances indicate it might be impaired. ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. During the year ended December 31, 2015, the Company recorded a $1.7 million of impairment charge to its goodwill. Revenue Recognition Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectability of amounts is reasonably assured. In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned by the Company. These rights may include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Inventor Royalties Inventor royalties are expensed in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, costs paid by the Company to acquire patents are recoverable from future net revenues. Patent acquisition costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense. Accounting for Warrants The Company accounts for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). In addition, Under ASC 815, registered common stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the consolidated balance sheet as a current liability. The Company assessed the classification of common stock purchase warrants as of the date of each offering and determined that such instruments met the criteria for liability classification. Accordingly, the Company classified the warrants as a liability at their fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in the fair value of warrant liabilities” in the consolidated statements of operations. The fair value of the warrants has been estimated using a Black-Scholes valuation model (see Note 6). Stock-based Compensation The Company accounts for share-based payment awards exchanged for employee services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options generally vest over a one- to five-year period. The fair value of stock options granted was determined on the grant date using assumptions for risk free interest rate, the expected term, expected volatility, and expected dividend yield. The risk free interest rate is based on U.S. Treasury zero-coupon yield curve over the expected term of the option. The expected term assumption is determined using the weighted average midpoint between vest and expiration for all individuals within the grant. The expected volatility assumption is computed based on the standard deviation of the Company’s underlying stock price's daily logarithmic returns. The Company’s model includes a zero dividend yield assumption, as the Company has not historically paid nor does it anticipate paying dividends on its common stock. The Company’s model does not include a discount for post-vesting restrictions, as the Company has not issued awards with such restrictions. The periodic expense is then determined based on the valuation of the options, and at that time an estimated forfeiture rate is used to reduce the expense recorded. The Company estimates of pre-vesting forfeitures is primarily based on the Company’s historical experience and is adjusted to reflect actual forfeitures as the options vest. Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary difference resulting from matters that have been recognized in the Company’s financial statement or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities measured at the enacted tax rates in effect for the year in which these items are expected to reverse. Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Net income (loss) attributable to common stockholders includes the effect of the deemed capital contribution on extinguishment of preferred stock and the deemed dividend related to the immediate accretion of beneficial conversion feature of convertible preferred stock. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method) and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and the exercise of stock options and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following table summarizes the earnings (loss) per share calculation (in thousands, except per share amount): For the Years Ended December 31, 2016 2015 Basic earnings per share Numerator: Net Loss $ (6,476 ) $ (51,465 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (323 ) Deemed capital contribution on extinguishment of preferred stock 31,480 9,485 Net income (loss) available to common stockholders $ 25,004 $ (42,303 ) Denominator: Weighted average number of common shares outstanding, 3,700,090 1,693,365 Earnings per basic share: Net Loss $ (1.75) $ (30.39 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (0.19 ) Deemed capital contribution on extinguishment of preferred stock 8.51 5.60 Net income (loss) available to common stockholders $ 6.76 $ (24.98 ) Dilutive earnings per share Numerator: Net Loss $ (6,476 ) $ (51,465 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (323 ) Deemed capital contribution on extinguishment of preferred stock 31,480 9,485 Net income (loss) available to common stockholders $ 25,004 $ (42,303 ) Denominator: Weighted average basic shares outstanding, 3,700,090 1,693,365 Weighted average effect of dilutive securities Employee stock options 296 - Convertible preferred stock 130,562 - Restricted stock units 7,418 - Weighted average diluted shares outstanding 3,838,366 1,693,365 Earnings per diluted share: Net Loss $ (1.69 ) $ (30.39 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (0.19 ) Deemed capital contribution on extinguishment of preferred stock 8.20 5.60 Net income (loss) available to common stockholders $ 6.51 $ (24.98 ) Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2016 and 2015 are as follows: As of December 31, 2016 2015 Convertible preferred stock 2,926 530,277 Warrants to purchase common stock 1,251,709 2,304,888 Options to purchase common stock 309,037 289,380 Total 1,563,672 3,124,545 Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Goodwill Impairment |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4. Property and Equipment The components of property and equipment as of December 31, 2016 and 2015, at cost are ($ in thousands): December 31, 2016 2015 Computers $ 16 $ 12 Office furniture and equipment 97 97 Leasehold improvements 229 229 Total cost 342 338 Accumulated depreciation and amortization (336 ) (333 ) Property and equipment, net $ 6 $ 5 The Company’s depreciation expense for the years ended December 31, 2016 and 2015 was $2,592 and $1,089, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 5. Intangible Assets Patent Portfolio The Company’s intangible assets with finite lives consist of its patents and patent rights. For all periods presented, all of the Company’s identifiable intangible assets were subject to amortization. The net carrying amounts related to acquired intangible assets as of December 31, 2016 are as follows ($ in thousands): Net Carrying Amount Weighted average Patent Portfolios at December 31, 2014, net $ 55,004 5.62 Amortization expenses (6,317 ) Impairment loss (38,888 ) Patent Portfolios and Patent Rights at December 31, 2015, net $ 9,799 4.63 Amortization expenses (2,135 ) Impairment loss (2,713 ) Patent Portfolios and Patent Rights at December 31, 2016, net $ 4,951 3.65 The amortization expenses related to acquired intangible assets for the years ended December 31, 2016 and 2015 are as follows ($ in thousands): For the Years Ended December 31, Date Acquired and Description 2016 2015 7/24/13 - Rockstar patent portfolio $ 104 $ 303 9/10/13 - North South patent portfolio 31 84 12/31/13 - Rockstar patent portfolio 2,000 5,930 $ 2,135 $ 6,317 The Company reviews its patent portfolio for impairment as a single asset group whenever events or changes in circumstances indicate that the carrying value may not be recoverable. During the second quarter of 2015, the Company determined that certain events occurred (i.e. decline in common stock price) that were indicators of a potential impairment. In accordance with ASC 360-10, the Company first estimated the future undiscounted cash flows anticipated to be generated by the patent portfolio based on the Company’s current usage and future plans for the patent portfolio over its remaining weighted average useful life. The analysis concluded that the carrying amount of the patent portfolio was not recoverable at June 30, 2015. As a result, the Company performed an analysis to determine if the carrying value of the patent portfolio exceeded its fair value. Considering that the patent portfolio is the Company’s most significant asset and is the foundation of all of its operations, the Company determined that the most appropriate measurement of fair value of the asset group was the aggregate market value of the Company’s common stock. As a result, the Company determined that the fair value of the patent portfolio at June 30, 2015 was approximately $14.6 million, which was comparable to the aggregate market capitalization of the Company as of that date. The Company recorded a $35.5 million impairment charge against its patent portfolio in the second quarter of 2015. Due to the continuing decrease in the Company’s stock price, the Company’s performed an additional impairment test of intangible assets at December 31, 2015. In accordance with ASC 360-10, the Company first estimated the future undiscounted cash flows anticipated to be generated by the patent portfolio based on the Company’s current usage and future plans for the patent portfolio over its remaining weighted average useful life. The analysis concluded that the carrying amount of the patent portfolio was not recoverable at December 31, 2015. As a result, the Company performed an analysis to determine if the carrying amount of the patent portfolio exceeded its fair value. Considering that the patent portfolio is the Company’s most significant asset and is the foundation of all of its operations, the Company determined that the most appropriate measurement of fair value of the asset group was the aggregate market value of the Company’s common stock. As a result, the Company determined that the fair value of the patent portfolio at December 31, 2015 was approximately $9.8 million, which was comparable to the aggregate market capitalization of the Company as of that date. The Company recorded an additional $3.4 million of impairment charge against its patent portfolio at December 31, 2015. The new cost basis of the patent portfolio of $9.8 million will be amortized over its weighted average remaining useful life of 4.63 years. The Company’s stock price continued to decrease during 2016. The Company’s performed an impairment test of intangible assets at December 31, 2016. In accordance with ASC 360-10, the Company first estimated the future undiscounted cash flows anticipated to be generated by the patent portfolio based on the Company’s current usage and future plans for the patent portfolio over its remaining weighted average useful life. The analysis concluded that the carrying amount of the patent portfolio was not recoverable at December 31, 2016. As a result, the Company performed an analysis to determine if the carrying amount of the patent portfolio exceeded its fair value. Considering that the patent portfolio is the Company’s most significant asset and is the foundation of all of its operations, the Company determined that the most appropriate measurement of fair value of the asset group was the aggregate market value of the Company’s common stock. As a result, the Company determined that the fair value of the patent portfolio at December 31, 2016 was approximately $5.0 million, which was comparable to the aggregate market capitalization of the Company as of that date. The Company recorded an additional $2.7 million of impairment charge against its patent portfolio at December 31, 2016. The new cost basis of the patent portfolio of $5.0 million will be amortized over its weighted average remaining useful life of 3.65 years. The future amortization of these intangible assets was based on the adjusted carrying amount. Future amortization of all patents is as follows ($ in thousands): Rockstar North South Rockstar Portfolio Portfolio Portfolio Acquired Acquired Acquired Total 24-Jul-13 10-Sep-13 31-Dec-13 Amortization Year Ended December 31, 2017 71 22 1,280 1,373 Year Ended December 31, 2018 71 22 1,280 1,373 Year Ended December 31, 2019 71 22 1,280 1,373 Year Ended December 31, 2020 71 22 639 732 Year Ended December 31, 2021 71 22 - 93 Thereafter 4 3 - 7 Total $ 359 $ 113 $ 4,479 $ 4,951 Equitable Agreement In March 2016, the Company entered into an agreement (which was subsequently amended) with Equitable IP Corporation (“Equitable”) to facilitate the monetization of the Company’s patents (the “Monetization Agreement”). Pursuant to the Monetization Agreement, the Company has worked together with Equitable to develop and revise the Company’s ongoing litigation plan. Under the Monetization Agreement, Equitable is obligated to use its best, commercially reasonable efforts to monetize the Company’s patents. To that end, Equitable has filed ten currently pending litigations. The Company will share net monetization revenue derived from all monetization activity equally with Equitable. To facilitate the litigation plan, approximately 186 of over 330 of the Company’s patents and applications have been assigned to Equitable, which will pay all maintenance and prosecution fees going forward. No assigned patents may be transferred by Equitable to a third party without the Company’s consent. In the event that all terms of the Monetization Agreement are met by December 2017, the Company will further assign approximately 140 additional patents and applications to Equitable for monetization. The Company has retained a grant-back license to practice all transferred patents. The Company concluded that the Monetization Agreement did not constitute a sale of the patents. The Company’s retention of the right to use the patents, the requirement for the Company’s consent to any sale, and the significant economic benefits the Company retained with respect to the litigation, licensing, and sale proceeds, did not meet the sale of patent criteria. The Monetization Agreement has been treated as an agreement to outsource its licensing activities to an outside servicer, for contingent fees based on the success of the servicer’s efforts. As such, the Company will not remove the patents from its consolidated balance sheet, and will record its share of litigation, licensing, and sales proceeds, if any, when those proceeds are received, or when due if the other revenue recognition criteria are met under ASC 605, Revenue Recognition |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Liabilities | Note 6. Fair Value of Financial Assets and Liabilities Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The following table presents the Company's assets and liabilities that are measured at fair value at December 31, 2016 and 2015 ($ in thousands): Fair value measured at December 31, 2016 Total carrying value Quoted prices in Significant other Significant 2016 (Level 1) (Level 2) (Level 3) Assets Marketable securities - corporate bonds $ 6,025 $ 211 $ 5,814 $ - Liabilities Fair value of warrant liabilities $ 702 $ - $ - $ 702 Fair value measured at December 31, 2015 Total carrying value Quoted prices in Significant other Significant 2015 (Level 1) (Level 2) (Level 3) Assets Marketable securities - mutual funds $ 3,392 $ 3,392 $ - $ - Liabilities Fair value of warrant liabilities $ 2,959 $ - $ - $ 2,959 There were no transfers between Level 1, 2 or 3 for the years ended December 31, 2016 and 2015. Level 3 Valuation Techniques Level 3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the warrant liabilities are recorded in “change in fair value of warrant liabilities” in the Company’s consolidated statements of operations. On July 21, 2015, the Company issued the July 2015 Warrants to purchase aggregate of 370,263 shares of common stock to the investors in the July 2015 Financing. The July 2015 Warrants become exercisable on January 22, 2016 at an exercise price of $8.17 per share. The warrants require, at the option of the holder, a net-cash settlement following certain fundamental transactions (as defined in the July 2015 Warrants) at the Company and therefore are classified as liabilities. The July 2015 Warrants have been recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at each subsequent balance sheet date. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. On December 7, 2015, the Company issued Series A warrants to purchase up to 1,052,624 shares of common stock and Series B warrants to purchase up to 842,099 shares of common stock contained in December Offering. Series A Warrants have an exercise price of $3.80 per share and are exercisable at any time between December 7, 2015 and May 6, 2016. 852,624 shares of Series A warrants expired on May 24, 2016, and no Series A Warrants remain outstanding as of December 31, 2016. Series B Warrants have an exercise price of $4.75 per share and are exercisable at any time between December 7, 2015 and December 6, 2020. The Warrants require the issuance of registered shares upon exercise, do not expressly preclude an implied right to cash settlement and are therefore accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the consolidated balance sheet as a current liability. The Series A and Series B warrants have been recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at each subsequent balance sheet date. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and as of December 31, 2016 and 2015 is as follows: Date of valuation December 31, 2016 December 31, 2015 Risk-free interest rate 1.93% 0.16% - 1.76% Expected volatility 100% - 133.79% 100% - 115.35% Expected life (in years) 3.93 - 4.06 0.3 - 5.1 Expected dividend yield - - The risk-free interest rate was based on rates established by the Federal Reserve. For the July 2015 Warrants, the expected volatility in the Black-Scholes model is based on an expected volatility of 100% for both periods which represents the percentage required to be used when valuing the cash settlement feature as contractually stated in the form of warrant. The general expected volatility is based on standard deviation of the Company’s underlying stock price's daily logarithmic returns. The expected life of the warrants was determined by the expiration date of the warrants. The expected dividend yield was based upon the fact that the Company has not historically paid dividends on its common stock, and does not expect to pay dividends on its common stock in the future. The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis for the year ended December 31, 2016 and 2015 ($ in thousands): Fair Value of Level 3 financial liabilities December 31, December 31, Beginning balance $ 2,959 $ - Recognition of warrant liabilities - 3,228 Fair value adjustment of warrant liabilities (2,257 ) (269 ) Ending balance $ 702 $ 2,959 |
RPX License Agreement
RPX License Agreement | 12 Months Ended |
Dec. 31, 2016 | |
Rpx License Agreement | |
RPX License Agreement | Note 7. RPX License Agreement On November 23, 2015, the Company and RPX Corporation (“RPX”) entered into a Patent License Agreement (the “RPX License Agreement”) under which the Company granted RPX the right to sublicense various patent license rights to certain RPX clients. The consideration to the Company included: (i) the transfer to the Company for cancellation of its remaining outstanding Series I Redeemable Convertible Preferred Stock (the “Series I Preferred Stock”), as to which a $5,000,000 mandatory redemption payment would have been due from the Company on or by December 31, 2015; (ii) the transfer to the Company for cancellation of 13%, or 57,076 shares, of its Series H Convertible Preferred Stock (the “Series H Preferred Stock”) then held by RPX, having a total carrying amount of $4,765,846 at the time the stock was issued to Rockstar; (iii) cancellation of the only outstanding security interest on 101 of the Company’s patents and patent applications that originated at Nortel Networks (“Nortel”) and were purchased by the Company from Rockstar, which security interest had previously been transferred to RPX by Rockstar (“RPX Security Interest”); and (iv) $300,000 in cash to the Company. While the license granted to RPX is non-exclusive and the duration of the license is for the life of the patents, the Company’s ongoing obligations in the arrangement is to provide certain specific RPX licensors with a non-exclusive license to any new patents that may be acquired by or exclusively licensed to the Company during the two-year period following the effective date of the agreement. Therefore, the Company will recognize $0.6 million revenue ratably over the two-year period that it is obligated to provide these RPX licensees with licenses to such new patents. During the year ended December 31, 2016 and 2015, the Company recorded approximately $290,000 and $31,000, respectively, in revenue related to the amortization of the license. On May 23, 2016, the Company, and RPX, entered into a second, separate, Patent License Agreement (the “RPX License”) under which the Company granted RPX the right to sublicense various patent rights only to current RPX clients (as of May 23, 2016). In exchange for the rights granted by the Company under the RPX License, the Company received the following consideration: (i) a cash payment made to the Company in May 2016 in the amount of $4,355,000; and (ii) cancellation of 100% of the remaining 381,967 shares of the Company’s outstanding Series H Convertible Preferred Stock currently held by RPX, having a total carrying amount of $31,894,244 at the time the stock was issued to Rockstar Consortium US LP (“Rockstar”). In consideration of the above, the Company granted RPX the rights to grant to its current clients: (i) a fully paid portfolio license, to the extent such parties did not already have licenses to the Company’s patents; (ii) a covenant-not-to-sue current RPX clients for supply of chipsets; (iii) a standstill of litigation involving any patents acquired in the next five years (“Standstill”). The Company also granted to Alcatel-Lucent a license to the portfolio acquired from the Harris Corporation. Under a separate agreement between the Company and RPX, the Company granted RPX the ability to grant to VTech Telecommunications Ltd. (“VTech”) a sublicense for a fully paid portfolio license in exchange for an additional $20,000 in cash consideration. The license granted under the terms of the RPX License described herein does not extend to entities/companies that are not clients of RPX and provide chipsets or other hardware to current RPX clients. The carrying value of Series H Convertible Preferred Stock on the extinguishment date was estimated at approximately $31.9 million. The fair value on the same date was estimated at approximately $414,000 based upon equivalent common shares that the Series H Convertible Preferred Stock could have converted into at the closing price on May 23, 2016. This resulted in the Company receiving cash from RPX of $4.4 million, a deemed capital contribution of approximately $31.5 million, short term deferred revenue $1.1 million and long term deferred revenue of $3.7 million. A summary of information with respect the RPX transaction on May 23, 2016 is as follows: Assumptions Stock price on May 22, 2016 $ 2.06 Series H Assumptions Series H Shares 381,967 Series H - Liquidation preference $ 83.50 Series H -Carrying value $ 31,894,245 Equivalent common shares - Series H 201,035 Fair Value of Series H preferred $ 414,133 Contribution/Deemed dividend $ 31,480,112 The deferred revenue will be amortized over a 5-year service period as the RPX License includes a standstill agreement which requires Spherix to provide the licensee with the right to use any future acquired patents for five years. During the year ended December 31, 2016, the Company recorded approximately $587,000 in revenue related to the amortization of the license. ASC 260-10-S99-2, Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock |
Stockholders' Equity and Redeem
Stockholders' Equity and Redeemable Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity and Redeemable Convertible Preferred Stock | Note 8. Stockholders’ Equity and Redeemable Convertible Preferred Stock Amended and Restated Certificate of Incorporation On March 4, 2016, the Company implemented a Reverse Stock Split with a ratio of 1-for-19. The par value and other terms of the common stock were not affected by the Reverse Stock Split. In addition, the amendment to the Company’s certificate of incorporation that effected the Reverse Stock Split simultaneously reduced the number of authorized shares of Common Stock from 200,000,000 to 100,000,000 (see Note 1). Common Stock 2016 activity On August 8, 2016, the Company closed on an underwritten public offering of 1,592,357 shares of the Company’s common stock at a price to the public of $1.57 per share. Under the terms of the Underwriting Agreement, the Company granted the representative of the underwriters a 30-day option to purchase up to 231,349 additional shares of its common stock (the 30-day underwriters option expired unexercised). The net proceeds to the Company were $2.1 million, after deducting the underwriting discount and other estimated offering expenses payable by the Company. 2015 activity On July 15, 2015, the Company entered into a placement agency agreement with Chardan Capital Markets, LLC as placement agent (the “Placement Agent”), relating to the July 2015 Financing, which was a registered direct offering to select institutional Investors of 301,026 shares of the Company’s Common Stock, $0.0001 par value per share, and Common Stock Purchase Warrants to purchase up to an aggregate of 370,263 shares of Common Stock. Pursuant to the Placement Agency Agreement, the Company paid the Placement Agent a cash fee of 8.0% of the gross proceeds from the July 2015 Financing and $25,000 for its expenses related to the offering. The Placement Agent had no commitment to purchase any of the shares of Common Stock or Warrants and was acting only as an agent in obtaining indications of interest from investors who purchased the shares of Common Stock and Warrants directly from the Company. In addition, on July 15, 2015, the Company and the investors in the July 2015 Financing entered into a securities purchase agreement (the “Securities Purchase Agreement”) relating to the issuance and sale of the offered shares and the warrants. The offered shares and warrants were sold in units, with each unit consisting of one-nineteenth of an Offered Share and a warrant to purchase 0.06 shares of Common Stock. The purchase price per unit was $4.864. The warrants provide for an exercise price of $8.17 per share and became exercisable on January 22, 2016 and have a term of five years thereafter. The exercise price of the Warrants will also be adjusted in the event of stock splits and reverse stock splits. Except upon at least 61 days’ prior notice from the holder to the Company, the holder will not have the right to exercise any portion of the Warrant if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of the Company’s common stock (including securities convertible into common stock) outstanding immediately after the exercise; provided, however, that the holder may not increase this limitation at any time in excess of 9.99%. The Securities Purchase Agreement further provides that, subject to certain exceptions, until the warrants issued in the July 2015 Financing are no longer outstanding, the Company will not affect or enter into a variable rate transaction. The Securities Purchase Agreement also provides the investors an 18-month right of participation for an amount up to 100% of such subsequent financing common stock (or common stock equivalents or a combination thereof), on the same terms and conditions of such transaction. The net proceeds to the Company from the July 2015 Financing, after deducting Placement Agent fees and the Company’s estimated offering expenses, and excluding the proceeds, if any, from the exercise of the Warrants, were approximately $1.3 million. The July 2015 Financing closed on July 21, 2015. As disclosed in Note 6, the warrants issued in the July 2015 Financing were required to be accounted for as derivative liabilities as a result certain net cash settlement provisions in control of the holder. As a result, of the total net proceeds received, $985,000 was allocated to the warrants on the closing date of the July 2015 Financing. On December 2, 2015, the Company entered into a purchase agreement with investors to sell an aggregate of 13.8 million Class A Units (consisting of one-nineteenth of a share of Common Stock, a Series A Warrant and a Series B). Included in the sale were 1,240 Class B Units issuable to those investors whose purchase of Class A Units in this offering would otherwise result in such investor beneficially owning more than 4.99% of the Company’s outstanding Common Stock immediately following the consummation of the December 2015 Offering. Each Class B Unit consisted of one share of Series K Preferred Stock, with a stated value of $1,000 per share and convertible into shares of Common Stock (on a 1 for 263 basis) at the public offering price of the Class A Units, together with the equivalent number of Series A warrants and Series B warrants as would have been issued to such purchaser if they had purchased Class A Units based on the public offering price. The Company received net proceeds of approximately $3.4 million from the December 2015 Offering after deducting placement agent fees and offering expenses. The December 2015 Offering closed on December 7, 2015. Of the total proceeds received, $2.2 million were allocated to the fair value of the warrants issued on the grant date. Beneficial Conversion Feature In the December 2015 Offering, the Company issued 1,240 shares of Series K Preferred Stock, together with Series A warrants for the purchase of 326,313 shares of Common Stock and Series B warrants for the purchase of 261,051 shares of Common Stock contained in the Class B Units (the “Class B Unit Warrants”). Series A Warrants have an exercise price of $3.80 per share and are exercisable at any time between December 7, 2015 and May 6, 2016. Series B Warrants have an exercise price of $4.75 per share and are exercisable at any time between December 7, 2015 and December 6, 2020. The Company assessed the Series K Preferred Stock under ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”), ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), and ASC Topic 470, “Debt” (“ASC 470”). The preferred stock contains an embedded feature allowing an optional conversion by the holder into common stock which meets the definition of a derivative. However, the Company determined that the Series K Preferred Stock is an “equity host” (as described by ASC 815) for purposes of assessing the embedded derivative for potential bifurcation and that the optional conversion feature is clearly and closely associated to the preferred stock host; therefore, the embedded derivative does not require bifurcation and separate recognition under ASC 815. The Company determined there to be a beneficial conversion feature (“BCF”) requiring recognition at its intrinsic value. Since the conversion option of the preferred stock was immediately exercisable, the amount allocated to the BCF was immediately accreted to preferred dividends, resulting in an increase in the carrying value of the preferred stock. As of December 31, 2015 the Company recorded a deemed dividend of approximately $323,000 related to the beneficial conversion feature with the issuance of the Series K Preferred Stock in the consolidated statements of operations. Preferred Stock On April 23, 2014, the Company filed a Certificate of Elimination with the Secretary of State of the State of Delaware eliminating its Series B Convertible Preferred Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock and returning them to authorized but undesignated shares of preferred stock. No shares of the foregoing series of preferred stock were outstanding. On May 28, 2014, the Company designated 20,000,000 shares of preferred stock as Series J Convertible Preferred Stock (“Series J Preferred Stock”). On December 2, 2015, the Company designated 1,240 shares of preferred stock as Series K Convertible Preferred Stock (“Series K Preferred Stock”). The Company had designated separate series of its capital stock as of December 31, 2016 and December 31, 2015 as summarized below: Number of Shares Issued and Outstanding as of December 31, 2016 December 31, 2015 Par Value Conversion Ratio Series "A" - - $ 0.0001 N/A Series "C" - - 0.0001 0.05:1 Series “D" 4,725 4,725 0.0001 0.53:1 Series “D-1" 834 834 0.0001 0.53:1 Series “F-1" - - 0.0001 0.05:1 Series “H" - 381,967 0.0001 0.53:1 Series “I” - - 0.0001 1.05:1 Series “J” - - 0.0001 0.05:1 Series “K” - 1,240 0.0001 263.16:1 Series A Participating Preferred Stock The Company’s board of directors has designated 500,000 shares of its preferred stock as Series A Participating Preferred Stock (“Series A Preferred Stock”). On January 1, 2013, the Company adopted a stockholder rights plan in which rights to purchase shares of Series A Preferred Stock were distributed as a dividend at the rate of one right for each share of common stock. The rights are designed to guard against partial tender offers and other abusive and coercive tactics that might be used in an attempt to gain control of the Company or to deprive its stockholders of their interest in the long-term value of the Company. These rights seek to achieve these goals by forcing a potential acquirer to negotiate with the board of directors (or to go to court to try to force the board of directors to redeem the rights), because only the board of directors can redeem the rights and allow the potential acquirer to acquire the Company’s shares without suffering very significant dilution. However, these rights also could deter or prevent transactions that stockholders deem to be in their interests, and could reduce the price that investors or an acquirer might be willing to pay in the future for shares of the Company’s common stock. Each right entitles the registered holder to purchase nineteen one-hundredths of a share (a “Unit”) of the Company’s Series A Preferred Stock. Each Unit of Series A Preferred Stock will be entitled to an aggregate dividend of 100 times the dividend declared per share of common stock. In the event of liquidation, the holders of the Units of Series A Preferred Stock will be entitled to an aggregate payment of 100 times the payment made per share of common stock. Each Unit of Series A Preferred Stock will have 100 votes, voting together with the common stock. Finally, in the event of any merger, consolidation or other transaction in which shares of common stock are exchanged, each Unit of Series A Preferred Stock will be entitled to receive 100 times the amount received per share of common stock. These rights are protected by customary anti-dilution provisions. The rights will be exercisable only if a person or group acquires 10% or more of the Company’s common stock (subject to certain exceptions stated in the plan) or announces a tender offer the consummation of which would result in ownership by a person or group of 10% or more of the Company’s common stock. The board of directors may redeem the rights at a price of $0.001 per right. The rights will expire at the close of business on December 31, 2017 unless the expiration date is extended or unless the rights are earlier redeemed or exchanged by the Company. As of December 31, 2016 and 2015, no shares of Series A Preferred Stock were issued and outstanding. Series C Convertible Preferred Stock On March 6, 2013, the Company and certain investors that participated in the Company’s November 2012 private placement transaction entered into separate Warrant Exchange Agreements pursuant to which those investors exchanged common stock purchase warrants for 229,337 shares of the Company’s Series C Convertible Preferred Stock (“Series C Preferred Stock”). Each share of Series C Preferred Stock is convertible into one-nineteenth of a share of Common Stock at the option of the holder. The Series C Preferred Stock was established on March 5, 2013 by the filing in the State of Delaware of a Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock. In December 2015, the one remaining share of Series C Preferred Stock was surrendered by the stockholder for cancellation. As of December 31, 2016 and 2015, no shares of Series of Series C Preferred Stock remained issued and outstanding, respectively. Series D Convertible Preferred Stock In connection with the acquisition of North South’s patent portfolio in September 2013, the Company issued 1,379,685 shares of its Series D Convertible Preferred Stock (“Series D Preferred Stock”) to the stockholders of North South. Each share of Series D Preferred Stock has a stated value of $0.0001 per share and is convertible into ten-nineteenths of a share of Common Stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series D Preferred Stock shall be entitled to receive, for each share of Series D Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis. Each holder of Series D Preferred Stock shall be entitled to vote on all matters submitted to its stockholders and shall be entitled to such number of votes equal to the number of shares of Common Stock such shares of Series D Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation and the conversion limitations described below. At no time may shares of Series D Preferred Stock be converted if such conversion would cause the holder to hold in excess of 4.99% of issued and outstanding Common Stock, subject to an increase in such limitation up to 9.99% of the issued and outstanding Common Stock on 61 days’ written notice to the Company. The conversion ratio of the Series D Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. As of December 31, 2016 and 2015, 4,725 shares of Series D Preferred Stock remained issued and outstanding. Series D-1 Convertible Preferred Stock The Company’s Series D-1 Convertible Preferred Stock (“Series D-1 Preferred Stock”) was established on November 22, 2013. Each share of Series D-1 Preferred Stock has a stated value of $0.0001 per share and is convertible into ten- nineteenths of a share of Common Stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series D-1 Preferred Stock shall be entitled to receive, for each share of Series D-1 Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis. Each holder of Series D-1 Preferred Stock shall be entitled to vote on all matters submitted to the Company’s stockholders and shall be entitled to such number of votes equal to the number of shares of Common Stock such shares of Series D-1 Preferred Stock are convertible into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation. At no time may shares of Series D-1 Preferred Stock be converted if such conversion would cause the holder to hold in excess of 9.99% of issued and outstanding Common Stock. The conversion ratio of the Series D-1 Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company commenced an exchange with holders of Series D Convertible Preferred Stock pursuant to which the holders of the Company’s outstanding shares of Series D Preferred Stock acquired in the Merger could exchange such shares for shares of the Company’s Series D-1 Preferred Stock on a one-for-one basis. As of December 31, 2016 and 2015, 834 shares of Series D-1 Preferred Stock remained issued and outstanding. Series F-1 Convertible Preferred Stock The Company’s Series F-1 Convertible Preferred Stock (“Series F-1 Preferred Stock”) was established on November 22, 2013. Each share of Series F-1 Preferred Stock was convertible, at the option of the holder at any time, into one-nineteenth of a share of Common Stock and had a stated value of $0.0001. Such conversion ratio was subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. Each share of Series F-1 Preferred Stock was entitled to 91% of the number of shares of Common Stock into which the Series F-1 was convertible (subject to beneficial ownership limitations) and voted together with holders of Common Stock. The Company was prohibited from effecting the conversion of the Series F-1 Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 9.99% in the aggregate of the issued and outstanding shares of Common Stock calculated immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series F-1 Preferred Stock. As of December 31, 2016 and 2015, no shares of Series F-1 Preferred Stock remained issued and outstanding. Series H Convertible Preferred Stock On December 31, 2013, the Company designated 459,043 shares of preferred stock as Series H Preferred Stock. On December 31, 2013, the Company issued approximately $38.3 million of Series H Preferred Stock (or 459,043 shares) to Rockstar. Each share of Series H Preferred Stock is convertible into ten-nineteenths of a share of Common Stock and has a stated value of $83.50. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Company is prohibited from effecting the conversion of the Series H Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99% (which may be increased to 9.99% and subsequently to 19.99%, each upon 61 days’ written notice), in the aggregate, of issued and outstanding shares of Common Stock calculated immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series H Preferred Stock. Holders of the Series H Preferred Stock shall be entitled to vote on all matters submitted to the Company’s stockholders and shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series H Preferred Stock are convertible, subject to applicable beneficial ownership limitations. The Series H Preferred Stock provides a liquidation preference of $83.50 per share. The shares of Series H Preferred Stock were not immediately convertible and did not possess any voting rights until such a time as the Company had obtained stockholder approval of the issuance, pursuant to NASDAQ Listing Rule 5635. On April 16, 2014, the Company obtained the required stockholder approval and, as a result, all outstanding shares of Series H Preferred Stock are convertible and possess voting rights in accordance with its terms. On May 28, 2014, 20,000 shares of Series H Preferred Stock were converted into 10,526 shares of Common Stock. In January 2015, Rockstar transferred its remaining outstanding Series H Preferred Stock to RPX Clearinghouse LLC, an affiliate of RPX. According to the RPX License Agreement disclosed in Note 7, on November 23, 2015, RPX transferred to the Company for cancellation 57,076 shares of Series H Preferred Stock then held by RPX, having a total carrying amount of $4,765,846 at the time the stock was issued to Rockstar. In connection with a second, separate, licensing agreement, on May 23, 2016, RPX transferred to the Company for cancellation of 100% of the remaining 381,967 shares of Series H Preferred Stock held by RPX, having a total carrying amount of $31,894,244 at the time the stock was issued to Rockstar (see Note 7 for further details). As of December 31, 2016 and 2015, none and 381,967 shares of Series H Preferred Stock remained issued and outstanding, respectively. Series I Redeemable Convertible Preferred Stock On December 31, 2013, the Company designated 119,760 shares of preferred stock as Series I Preferred Stock. On December 31, 2013, the Company issued approximately $20 million (or 119,760 shares) of Series I Preferred Stock to Rockstar. Each share of Series I Preferred Stock was convertible into twenty-nineteenths of a share of Common Stock and had a stated value of $167.00. The conversion ratio was subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The holder was prohibited from converting the Series I Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owned more than 4.99% (which may be increased to 9.99% and subsequently to 19.99%, each upon 61 days’ written notice), in the aggregate, of the Company’s issued and outstanding shares of Common Stock calculated immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series I Preferred Stock. Holders of the Series I Preferred Stock shall be entitled to vote on all matters submitted to its stockholders and shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series I Preferred Stock were convertible, subject to applicable beneficial ownership limitations. The Series I Preferred Stock provided for a liquidation preference of $167.00 per share. The Series I Preferred Stock contained a mandatory redemption date of December 31, 2015 as to 100% of the Series I Preferred Stock then outstanding, requiring a minimum of 25% of the total number of shares of Series I Preferred Stock issued to be redeemed (less the amount of any conversions occurring prior thereto) on or prior to each of September 30, 2014, December 31, 2014, June 30, 2015 and December 31, 2015 (each, a “Partial Redemption Date” and each payment, a “Redemption Payment”). On each Partial Redemption Date, the Company was required to pay the holder a Redemption Payment equal to the lesser of (i) such number of shares of Series I Preferred Stock as had a stated value of $5.0 million; or (ii) such number of shares of Series I Preferred Stock as should, together with all voluntary and mandatory redemptions and conversions to Common Stock occurring prior to the applicable Partial Redemption Date, had an aggregate stated value of $5.0 million; or (iii) the remaining shares of Series I Preferred Stock issued and outstanding if such shares had an aggregate stated value of less than $5.0 million, in an amount of cash equal to its stated value plus all accrued but unpaid dividends, distributions and interest thereon, unless such holder of Series I Preferred Stock, in its sole discretion, elected to waive such Redemption Payment or convert such shares of Series I Preferred Stock (or a portion thereof) into Common Stock. No interest or dividends were payable on the Series I Preferred Stock unless the Company failed to make the first $5.0 million Partial Redemption Payment due September 30, 2014, then interest should accrue on the outstanding stated value of all outstanding shares of Series I Preferred Stock at a rate of 15% per annum from January 1, 2014. The Company’s obligations to pay the Redemption Payments and any interest payments in connection therewith were secured pursuant to the terms of a Security Agreement under which the Rockstar patent portfolio serves as collateral security. No action can be taken under the Security Agreement unless the Company had failed to make a second redemption payment of $5.0 million due December 31, 2014, which payment was made. The Security Agreement contains additional usual and customary events of default under which the holder could take action, including a sale to a third party or reduction of secured amounts via transfer of the Rockstar patent portfolio to the holder. Additionally, in the event the Company consummated a Fundamental Transaction (as defined below), the Company should be required to redeem such portion of the outstanding shares of Series I Preferred Stock as shall equal (i) 50% of the net proceeds of the Fundamental Transaction after deduction of the amount of net proceeds required to leave the Company with cash and cash equivalents on hand of $5.0 million and up until the net proceeds leave the Company with cash and cash equivalents on hand of $7.5 million and (ii) 100% of the net proceeds of the Fundamental Transaction thereafter. “Fundamental Transaction” means directly or indirectly, in one or more related transactions: (a) the Company of any subsidiary realizes net proceeds from any financing, recovery, sale, license fee or other revenue received by the Company (including on account of any intellectual property rights held by the Company and not just in respect of the patents) during any fiscal quarter in an amount which would cause the cash or cash equivalents of the Company to exceed $5,000,000, (b) the Company consolidates or merges with or into (whether or not the Company or any of its subsidiaries is the surviving corporation) any other person, or (c) the Company or any of its subsidiaries sells, leases, licenses, assigns, transfers, conveys or otherwise disposes of all or substantially all of its respective properties or assets to any other Person, provided that, in the event of a Fundamental Transaction under clause (b) or (c), neither such Fundamental Transaction may proceed without the consent of the holders holding a majority of the shares of Series I Preferred Stock unless (A) all shares of Series I Preferred Stock held by the holders are redeemed with interest upon closing of such Fundamental Transaction, and (B) all shares of Common Stock of the Company then held by the holders are redeemed or otherwise purchased for cash or freely tradable securities of a publicly traded company at a price at or above the then-current market value of such Common Stock. The shares of Series I Preferred Stock were not immediately convertible and did not possess any voting rights until such a time as the Company had obtained stockholder approval of the issuance, pursuant to NASDAQ Listing Rule 5635. On April 16, 2014, the Company obtained the required stockholder approval and, as a result, all outstanding shares of Series I Preferred Stock are convertible and possess voting rights in accordance with its terms. In January 2015, Rockstar transferred its remaining outstanding Series I Preferred Stock, as well as its other stock in the Company to RPX Clearinghouse LLC. In June 2015, the Company redeemed 5,601 shares of Series I Preferred Stock. In accordance with this redemption, the Company paid RPX $0.9 million. On November 23, 2015, as per RPX License Agreement disclosed in Note 7, RPX transferred to the Company for cancellation all remaining 29,940 shares of Series I Preferred Stock, as to which a $5,000,000 mandatory redemption payment would have been due from the Company on or by December 31, 2015. As of December 31, 2016 and 2015, no shares of Series I Preferred Stock remained issued and outstanding, respectively. Series J Convertible Preferred Stock On May 28, 2014, the Company designated 20,000,000 shares of preferred stock as Series J Preferred Stock. On May 28, 2014, the Company entered into a placement agency agreement with Laidlaw & Company (UK) Ltd., as the placement agent, which provided for the issuance and sale in a registered direct public offering (the “Series J Offering”) by the Company of 10,000,000 shares of Series J Preferred Stock which were convertible into a total of 526,315 shares of Common Stock. The Series J Preferred Stock in the Series J Offering was sold at a public offering price of $2.00 per share. The net offering proceeds to the Company from the sale of the shares were approximately $18.4 million, after deducting placement agent fees ($1.32 million), legal fees ($0.18 million) and escrow fee ($0.04 million). The sale of the Series J Preferred Stock was made pursuant to a subscription agreement between the Company and certain investors in the Series J Offering. The shares of Series J Preferred Stock carry a liquidation preference equal to the greater of (i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock if such holder had converted the Series J Preferred Stock immediately prior to such liquidation, dissolution or winding up. Each holder of Series J Preferred Stock is entitled to vote on all matters submitted to stockholders of the Company and is entitled to a vote of 67.3% of the number of votes for each share of Common Stock into which the Series J Preferred Stock is convertible owned at the record date for the determination of stockholders entitled to vote on such matter. Subject to certain ownership limitations as described below, shares of Series J Preferred Stock are convertible at any time at the option of the holder into shares of Common Stock in an amount equal to one-nineteenths of a share of Common Stock for each one share of Series J Preferred Stock surrendered. Subject to limited exceptions, holders of shares of Series J Preferred Stock do not have the right to convert any portion of their Series J Preferred Stock that would result in the holder, together with its affiliates, beneficially owning in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to its conversion; notwithstanding the foregoing, some Investors elected to have the 9.99% beneficial ownership limitation to initially be 4.99%. As of December 31, 2016 and 2015, no shares of Series J Preferred Stock are issued and outstanding. Series K Convertible Preferred Stock On December 2, 2015, the Company designated 1,240 shares of preferred stock as Series K Preferred Stock. On December 7, 2015, the Company issued 1,240 shares of Series K Preferred Stock in December 2015 Offering. Each share of Series K Preferred Stock is convertible into five thousand-nineteenths of a share of Common Stock and has a stated value of $1,000. The conversion ratio is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The Series K Preferred do not generally have any voting rights but are convertible into shares of Common Stock. At no time may shares of Series K Preferred Stock be converted if such conversion would cause the holder to hold in excess of 4.99% of the issued and outstanding Common Stock, subject to an increase in such limitation up to 9.99% of the issued and outstanding Common Stock on 61 days’ written notice to the Company. The conversion ratio of the Series K Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. Since January 1, 2016, stockholders have converted 1,240 shares of Series K Preferred Stock into 326,315 shares of Common Stock. As of December 31, 2016 and 2015, none and 1,240 shares, respectively, of Series K Preferred Stock are issued and outstanding. Warrants A summary of warrant activity for year ended December 31, 2016 is presented below: Warrants Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2015 2,304,888 $ 7.98 $ - 2.83 Exercised (200,000 ) 3.80 Expired (854,577 ) - Outstanding as of December 31, 2016 1,250,311 $ 9.21 3.91 Exercisable as of December 31, 2016 1,250,311 $ 9.21 $ - 3.91 Stock Options 2012 Plan In late 2012, the Company adopted the 2012 Equity Incentive Plan (the “2012 Plan”) which permits issuance of incentive stock options, non-qualified stock options and restricted stock. The 2012 Plan replaced a prior incentive stock plan. At December 31, 2016, there were 282 fully vested options outstanding and 239 shares available for grant under the 2012 Plan. 2013 Plan In April 2013, the Company’s board of directors adopted the Spherix Incorporated 2013 Equity Incentive Plan (the “2013 Plan”), an omnibus equity incentive plan pursuant to which the Company may grant equity and cash and eq |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9. Related Party Transactions Executive Officer Agreements 2016 activity On May 20, 2016, the Company entered into a new employment agreement with the Company’s CEO, Anthony Hayes (the “Employment Agreement”) retroactively effective to April 1, 2016. Pursuant to the terms of the Agreement, Mr. Hayes will be paid an annual base salary of $350,000 (“Base Salary”) and a target annual bonus opportunity equal to a maximum of 100% of the Base Salary upon the achievement of certain milestones as agreed to by the Compensation Committee of the Board of Directors. There has been no increase in the dollar amounts of the base salary or maximum target bonus amounts from the prior effective employment agreement of Mr. Hayes. In the event that Mr. Hayes’ employment is terminated by the Company without “cause” or by Mr. Hayes for “good reason” (each as defined in the Employment Agreement), Mr. Hayes will be entitled to receive, subject to his execution and non-revocation of a separation and release agreement, a separation payment in the amount of one year’s base salary at the then-current rate payable, plus any payment on a pro-rated basis for any bonus earned in connection with any bonus plan to which he was a participant at the date of such termination within thirty days of such termination. The employment agreement with Mr. Hayes also contains customary confidentiality, noncompetition, non-solicitation and non-disparagement provisions. In addition, as previously disclosed, Mr. Hayes was granted an award of restricted stock units totaling 118,512 shares of common stock. One-half of the grant shall vest if as of December 31, 2016, the Corporation has pro-forma cash of at least five million dollars ($5,000,000) (cash plus any cash used for a Board-approved extraordinary acquisition or transaction reconstituting the Company’s core operations, less accrued bonuses) and one-half shall vest upon the achievement of certain agreed milestones. As of December 31, 2016, 59,256 restricted stock units were vested and 59,256 restricted stock units were forfeited. On August 24, 2016, the Board of Directors of the Company appointed Mr. Eric Weisblum to serve as director of the Company, effective upon his acceptance of such position. Mr. Weisblum is currently appointed as a member of the Audit, Compensation and Nominating committees. There is no written agreement or understanding between Mr. Weisblum and any other person pursuant to which Mr. Weisblum was appointed as a director. Mr. Weisblum is not a party to any transactions that would require disclosure under Item 404(a) of Regulation S-K and has not entered into any material plan, contract, arrangement or amendment in connection with his election to the Board. Mr. Weisblum is eligible to participate in all compensatory arrangements from time to time in effect for the Company’s other Board members. 2015 activity As it relates to Mr. Hayes 2014 annual bonus, during the year ended December 31, 2014, the Compensation Committee of the Board of Directors (the “Board”) approved a bonus payout of $175,000 for services provided in 2014. The Company has included such bonus in accrued expenses on the consolidated balance sheet as of December 31, 2014. Mr. Hayes waived the receipt of this accrued bonus during the year ended December 31, 2015. In February 2015, the members of the Compensation Committee established milestones related to the target bonus per the Employment Agreement (a “Target Bonus”) for the Company’s Chief Executive Officer, Mr. Anthony Hayes. The amount of the Target Bonus per the Agreement is (i) $350,000 in cash, which shall be payable in a single lump-sum payment promptly following the consummation of a Qualifying Strategic Transaction (or series of transactions), and (ii) a discretionary bonus to be determined by the Compensation Committee, in its sole discretion, prior to the earlier of a proxy solicitation in 2015 in relation to a qualifying strategic transaction(s) or the consummation thereof. Qualifying Strategic Transactions were defined as transaction(s) that would provide gross proceeds or borrowing capacity of at least $12.0 million to the Company. The Target Bonus of $350,000 was included in accrued salaries and benefits in the first quarter of 2015 as management determined at that time it was probable that a Qualifying Strategic Transaction would occur. In December 2015, the members of Compensation Committee reviewed the 2015 achievements and deemed that Mr. Hayes achieved the criteria for his 2015 Target Bonus by consummating a number of strategic transactions prior to December 31, 2015 that together reached the applicable bonus threshold. The Company accrued Mr. Hayes’ $350,000 bonus under accrued salaries and benefits on the consolidated balance sheets, paid it to him in cash in January 2016. On January 6, 2014, the Company’s Board appointed Richard Cohen as its Chief Financial Officer, and Michael Pollack resigned as the interim Chief Financial Officer of the Company, effective January 3, 2014. Mr. Cohen was served as the Company’s Chief Financial Officer pursuant to an agreement with Chord Advisors, LLC (“Chord”), of which Mr. Cohen was Chairman. In consideration for Mr. Cohen’s services, the Company agreed to pay Chord a monthly fee of $20,000, $5,000 of which was initially payable in shares of the Company’s common stock. In April 2014, the Company modified this agreement to pay Chord a monthly fee of $20,000 in cash. The previous $15,000 payable in shares was forgiven by Chord. On June 30, 2015, the Board of the Company accepted the resignation of Richard Cohen as Chief Financial Officer of the Company, effective immediately. In connection therewith, the Company amended and restated its consulting agreement with Chord, an advisory firm that provides the Company with certain accounting services, such that it would continue to provide the Company with certain financial accounting and advisory services, with the monthly fee to Chord reduced from $20,000 to $10,000 per month since its affiliate would no longer serve as the Company’s Chief Financial Officer. In connection with the resignation of Mr. Cohen, on June 30, 2015, the Board of Directors appointed Frank Reiner as the Interim Chief Financial Officer of the Company, effective immediately. Pursuant to Mr. Reiner’s employment agreement with the Company, dated as of March 14, 2014, as amended, the term of Mr. Reiner’s employment is one year and automatically extends for additional one-year terms unless no less than 60 days’ prior written notice of non-renewal is given by Mr. Reiner or the Company. Mr. Reiner’s base salary under his employment agreement was $235,000 per year, but in connection with being named Interim Chief Financial Officer, the Board of Directors authorized an amendment to Mr. Reiner’s employment agreement to increase Mr. Reiner’s base salary to $271,000. Mr. Reiner is also entitled to receive an annual bonus if the Compensation Committee of the Board determines that performance targets have been met. The amount of the annual bonus is determined based on the Company’s gross proceeds from certain monetization of the Company’s intellectual property. Mr. Reiner is also eligible to participate in all employee benefits plans from time to time in effect for the Company’s other senior executive officers. In December 2015, the members of the Compensation Committee determined that, under Mr. Reiner’s employment agreement, the Company has the obligation to pay Mr. Reiner $60,000 in shares of common stock in respect of his performance for the 2015 fiscal year. The Company will also pay Mr. Reiner an annual bonus of $40,000 in cash in respect of his 2015 performance. For the 2014 fiscal year, Mr. Reiner achieved the target for an annual bonus of $20,000 in cash and $20,000 in shares of common stock. The payment was deferred in 2015. The common stock portion of 2014 bonus shall be paid in cash lieu of in common stock. The Company accrued Mr. Reiner’s 2014 and 2015 cash bonus under accrued salaries and benefits on the consolidated balance sheets. In January 2016, the Company paid Mr. Reiner $80,000 in cash. On August 10, 2015, the Company entered into a consulting agreement with Mr. Howard E. Goldberg (d/b/a Forward Vision Associates, of which Mr. Goldberg is the sole proprietor and owner), on an independent contractor basis, pursuant to which Mr. Goldberg will, among other services, provide advisory services to the Company in areas including licensing, litigation and business strategies. The Company will pay Mr. Goldberg an agreed upon quarterly retainer amount of $20,400 (calculated on an hourly basis) and, if applicable, upon exhaustion of each quarterly retainer, at an hourly rate to be paid in equity (for the first 50 hours above the quarterly retainer), and subsequently (if applicable) at an hourly rate thereafter in cash. The Company will reimburse Mr. Goldberg for actual out-of-pocket expenses. The consulting agreement with Mr. Goldberg has an initial term of one year, unless consultant has completed the desired services by an earlier date or unless the agreement is earlier terminated pursuant to its terms. The consulting agreement with Mr. Goldberg may be extended by written agreement of both the Company and consultant. For the year ended December 31, 2016 and 2015, the Company incurred $80,800 and $42,287, respectively, consulting expenses related to this agreement. Mr. Goldberg was also appointed as a director of the Company. Mr. Goldberg resigned as a director of the Company on October 26, 2016 and as of August 2016, Mr. Goldberg no longer serves as a consultant to the Company. |
Assignment and Assumption of Ri
Assignment and Assumption of Rights Agreement with TOI | 12 Months Ended |
Dec. 31, 2016 | |
Assignment And Assumption Of Rights Agreement With Toi | |
Assignment and Assumption of Rights Agreement with TOI | Note 10. Assignment and Assumption of Rights Agreement with TOI On June 16, 2012, the Company and Transfer Online, Inc. (“TOI”) entered into an Assignment and Assumption of Rights Agreement (the “Assignment”) to that certain Rights Agreement, effective January 1, 2013 (valid through December 31, 2017, referred to herein as the “Rights Agreement”) originally entered into between the Company and Equity Stock Transfer (“EST”), and previously filed by the Company on Form 8-K with the Securities and Exchange Commission on January 30, 2013. The Assignment of the Rights Agreement replaced EST as the Rights Agent and to appoint TOI as the successor Rights Agent on July 15, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11. Commitments and Contingencies Financing of Directors’ and Officers’ Insurance The Company financed its Directors’ and Officers’ insurance policy for approximately $0.2 million. Payments are due monthly and the policy is for 12 months. Finance charges for the 12-month period are nominal. As of December 31, 2016, the Company owed approximately $0.1 million and such amounts were recorded in accrued expenses. The Company has made regular payments in accordance with this insurance policy. Leases Future minimum rental payments required as of December 31, 2016, including Bethesda office lease obligation are as follows ($ in thousands): Lease Payments Year Ended December 31, 2017 220 Year Ended December 31, 2018 45 $ 265 Legal Proceedings In the ordinary course of business, the Company actively pursues legal remedies to enforce its intellectual property rights and to stop unauthorized use of use technology. From time to time, the Company may be involved in various claims and counterclaims and legal actions arising in the ordinary course of business. There were no pending material claims or legal matters as of the date of this report other than the following matters: Spherix Incorporated v. Uniden Corporation et al., Case No. 3:13-cv-03496-M, in the United States District Court for the Northern District of Texas On August 30, 2013, we initiated litigation against Uniden Corporation and Uniden America Corporation (collectively “Uniden”) in Spherix Incorporated v. Uniden Corporation et al inter partes Markman Spherix Incorporated v. VTech Telecommunications Ltd. et al. Markman International License Exchange of America, LLC v. Fairpoint Communications, Inc., Case No. 1:16-cv-00305-RGA, in the United States District Court for the District of Delaware On April 26, 2016, we initiated litigation against Fairpoint Communications, Inc. in Spherix Incorporated v. Fairpoint Communications, Inc. International License Exchange of America, LLC Litigations Under our Monetization Agreement with Equitable, ILEA has filed the patent infringement litigations listed below. The defendants in these cases have not yet filed answers to the complaints. o On August 12, 2016, litigation against Cincinnati Bell, Inc., case number 1:16-cv-00715-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of U.S. Patent No. RE40,999 (“the ‘999 patent”), U.S. Patent No. 6,970,461, and U.S. Patent No. 7,478,167. On March 8, 2017, Cincinnati Bell filed a motion to dismiss, alleging lack of personal jurisdiction and improper venue. o On August 12, 2016, litigation against Frontier Communications Corporation, case number 1:16-cv-00714-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. o On August 12, 2016, litigation against Echostar Corporation, case number 1:16-cv-00716-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. o On August 15, 2016, litigation against ATN International, Inc. Commnet Wireless, LLC Choice Communications LLC, and Choice Communications, LLC (“Choice Wireless”), case number: 1:16-cv-00718-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. o On August 15, 2016, litigation against Sprint Corporation and Clearwire Corporation case number 1:16-cv-00719-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. o On August 16, 2016, litigation against ViaSat, Inc., case number 1:16-cv-00720-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. On March 7, 2017, ViaSat filed a motion to dismiss, alleging failure to state a plausible claim of patent infringement. o On September 9, 2016, litigation against Fortinet Inc., case number 1:16-cv-00795-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. On March 7, 2017, Fortinet filed its answer to the Complaint. o On September 9, 2016, litigation against GTT Communications, Inc., case number 1:16-cv-00796-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent. o On November 22, 2016, litigations against Alcatel-Lucent SA and Alcatel-Lucent USA Inc., case number 1:16-cv-01077-RGA, in the U.S. District Court for the District of Delaware, related to alleged infringement of the ‘999 patent and U.S. Patent Nos. 7,158,515; 6,222,848; 6,578,086; and 6,697,325. Counterclaims In the ordinary course of business, we, or with our wholly-owned subsidiaries or monetization partners, will initiate litigation against parties whom we believe have infringed on our intellectual property rights and technologies. The initiation of such litigation exposes us to potential counterclaims initiated by the defendants. Currently, there are no counterclaims pending against us. In the event such counterclaims are filed, we can provide no assurance that the outcome of these claims will not have a material adverse effect on our financial position and results from operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12. Income Taxes The income tax provision consists of the following ($ in thousands): dollars in thousands As of December 31, 2016 2015 Federal Current $ - $ - Deferred 3,578 16,374 Increase in valuation allowance 3,578 (16,374 ) State and local Current - - Deferred (50 ) 837 Increase in valuation allowance 50 (837 ) Change in Valuation Allowance (3,578 ) (17,211 ) Income Tax Provision (Benefit) $ - - The following is a reconciliation of the U.S. federal statutory rate to the effective income tax rates for the years ended December 31, 2016 and 2015: For the years ended December 31, 2016 2015 U.S. Statutory Federal Rate 34.00 % 34.00 % State Taxes, Net of Federal Tax Benefit 2.97 % 2.52 % Other Permanent Differencee 1.01 % 0.01 % State rate change effect 6.88 % -0.75 % Fair Value of Warrants 11.85 % 0.00 % Increase due to change in NOL and other true ups (1.47 )% -2.35 % Change in Valuation Allowance - 55.25 % -33.43 % Income Taxes Provision (Benefit) 0.0 0.0 At December 31, 2016 and 2015, the Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following ($ in thousands): dollars in thousands As of December 31, 2016 2015 Deferred tax assets: Net-operating loss carryforward $ 12,971 $ 10,290 Stock based compensation 8,413 8,101 Patent portfolio and other 17,796 17,211 Total Deferred Tax Assets 39,180 35,602 Valuation allowance (39,180 ) (35,602 ) Deferred Tax Asset, Net of Allowance $ - $ - In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. The Company has determined that, based on objective evidence currently available, it is more likely than not that the deferred tax assets will not be realized in future periods. Accordingly, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2016 and 2015. As of December 31, 2016, the change in valuation allowance is approximately $6.0 million. As of December 31, 2016, the Company had federal and state net operating loss carryovers (“NOLs”) of approximately $37.5 million, which expire from 2029 through 2036. The NOL carryover may be subject to limitation under Internal Revenue Code section 382, should there be a greater than 50% ownership change as determined under the regulations. The Company’s net operating loss includes approximately $3.0 million of previously unidentified loss benefits, net of limitations under section 382 of the Internal Revenue Code and similar state provisions. The deferred tax asset balance at December 31, 2015 and related valuation allowance has been revised to include the amount of the benefit. The Company has determined that the amount of the revision is insignificant to the Company’s previously reported financial position and results of operations. The effect of any subsequent ownership change may lower annual limitation and further decrease available NOL carryover utilization. As required by the provisions of ASC 740, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of NOL or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740. If applicable, interest costs and penalties related to unrecognized tax benefits are required to be calculated and would be classified as interest and penalties in general and administrative expense in the statement of operations. As of December 31, 2016 and 2015, no liability for unrecognized tax benefit was required to be reported. No interest or penalties were recorded during the years ended December 31, 2016 and 2015. The Company does not expect any significant changes in its unrecognized tax benefits in the next year. The Company files U.S. federal and state income tax returns. As of December 31, 2016, the Company’s U.S. and state tax returns (California, Delaware, Maryland, New York, New York City Pennsylvania and Texas) remain subject to examination by tax authorities beginning with the tax return filed for the year ended December 31, 2013. At this time, the Company's 2013 federal tax return has been selected for examination by the Internal Revenue Service. The Company believes that its income tax positions would be sustained upon an audit and does not anticipate any adjustments that would result in material changes to its consolidated financial position. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than disclosed. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Nuta Technology Corp. (“Nuta”), Spherix Portfolio Acquisition II, Inc. (“SPXII”), Guidance IP, LLC (“Guidance”), Directional IP, LLC (“Directional”), Spherix Management Services, LLC (“SMS”) and NNPT, LLC (“NNPT”). All significant intercompany balances and transactions have been eliminated in consolidation |
Use of Estimates | Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. |
Segment | Segments The Company operates in one operating segment and, accordingly, no segment disclosures have been presented herein. |
Concentration of Cash | Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. As of December 31, 2016 and 2015, the Company had $0.1 million in cash and cash equivalents. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. |
Marketable Securities | Marketable Securities Marketable securities are classified as trading and are carried at fair value. The Company’s marketable securities consist of corporate bonds and highly liquid mutual funds and exchange-traded & closed-end funds which are valued at quoted market prices. During the year ended December 31, 2016 and 2015, the Company incurred realized losses of approximately $95,000 and $91,000, respectively, and unrealized loss of approximately $243,000 and unrealized gains of approximately $19,000, respectively, on its investments in marketable securities, which are included in other income, net on the consolidated statements of operations. In addition, during the year ended December 31, 2016 and 2015, the Company earned dividend income of approximately $19,000 and $52,000, respectively, which is included in other income, net on the consolidated statement of operations. The Company reinvested such dividend income into its marketable securities during the years ended December 31, 2016 and 2015. The market value of marketable securities held as of December 31, 2016 and 2015 were $6.0 million and $3.4 million, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and include office furniture and equipment and computer hardware and software. The Company computes depreciation and amortization under the straight-line method and typically over the following estimated useful lives of the related assets: Office furniture and equipment 3 to 10 years Computer hardware and software 3 to 5 years |
Impairment of Long-lived Assets (Including Patent Assets) | Impairment of Long-lived Assets (Including Patent Assets) The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If a change in circumstance occurs, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets for which the Company can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, the Company measures any impairment by comparing the fair value of the asset or asset group to its carrying value. The Company determined it was necessary to test its intangible assets for impairment during the second quarter of 2015. Due to the decline in stock price which the Company considered a triggering event, at December 31, 2015, the Company performed an additional impairment test for intangible assets. During the year ended December 31, 2015, the Company recorded a $38.9 million of impairment charges to its intangible assets. Due to the continuous decline in stock price during 2016, the Company performed an additional impairment test for intangible assets at December 31, 2016 and recorded $2.7 million of impairment charges to its intangible assets (see Note 5). |
Convertible Preferred Stock | Convertible Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity. The Company accounts for convertible preferred stock with detachable warrants in accordance with ASC 470: Debt The Company has also evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging As the convertible preferred stock may be converted immediately, the Company recognized the BCF as a deemed dividend in the consolidated statements of operations. |
Treasury Stock | Treasury Stock The Company accounts for the treasury stock using the cost method, which treats it as a reduction in stockholders’ equity. |
Goodwill | Goodwill Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that indicate the carrying amount may be impaired. Accounting Standards Codification (“ASC”) Topic 350 provides an entity with the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. If the two-step impairment test is necessary, a fair-value-based test is applied at the reporting unit level, which is generally one level below the operating segment level. The test compares the fair value of an entity's reporting units to the carrying value of those reporting units. This test requires various judgments and estimates. The Company estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit. An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired. The Company tests goodwill for impairment at least annually in conjunction with the preparation of its annual business plan, or more frequently if events or circumstances indicate it might be impaired. ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. During the year ended December 31, 2015, the Company recorded a $1.7 million of impairment charge to its goodwill. There was no goodwill impairment in 2016. |
Revenue Recognition | Revenue Recognition Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectability of amounts is reasonably assured. In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned by the Company. These rights may include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. |
Inventor Royalties | Inventor Royalties Inventor royalties are expensed in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, costs paid by the Company to acquire patents are recoverable from future net revenues. Patent acquisition costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense. |
Accounting for Warrants | Accounting for Warrants The Company accounts for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). In addition, Under ASC 815, registered common stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the consolidated balance sheet as a current liability. The Company assessed the classification of common stock purchase warrants as of the date of each offering and determined that such instruments met the criteria for liability classification. Accordingly, the Company classified the warrants as a liability at their fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in the fair value of warrant liabilities” in the consolidated statements of operations. The fair value of the warrants has been estimated using a Black-Scholes valuation model (see Note 6). |
Stock-based Compensation | Stock-based Compensation The Company accounts for share-based payment awards exchanged for employee services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options generally vest over a one- to five-year period. The fair value of stock options granted was determined on the grant date using assumptions for risk free interest rate, the expected term, expected volatility, and expected dividend yield. The risk free interest rate is based on U.S. Treasury zero-coupon yield curve over the expected term of the option. The expected term assumption is determined using the weighted average midpoint between vest and expiration for all individuals within the grant. The expected volatility assumption is computed based on the standard deviation of the Company’s underlying stock price's daily logarithmic returns. The Company’s model includes a zero dividend yield assumption, as the Company has not historically paid nor does it anticipate paying dividends on its common stock. The Company’s model does not include a discount for post-vesting restrictions, as the Company has not issued awards with such restrictions. The periodic expense is then determined based on the valuation of the options, and at that time an estimated forfeiture rate is used to reduce the expense recorded. The Company estimates of pre-vesting forfeitures is primarily based on the Company’s historical experience and is adjusted to reflect actual forfeitures as the options vest. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary difference resulting from matters that have been recognized in the Company’s financial statement or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities measured at the enacted tax rates in effect for the year in which these items are expected to reverse. Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. |
Net Loss Per Share | Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Net income (loss) attributable to common stockholders includes the effect of the deemed capital contribution on extinguishment of preferred stock and the deemed dividend related to the immediate accretion of beneficial conversion feature of convertible preferred stock. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method) and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and the exercise of stock options and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following table summarizes the earnings (loss) per share calculation (in thousands, except per share amount): For the Years Ended December 31, 2016 2015 Basic earnings per share Numerator: Net Loss $ (6,476 ) $ (51,465 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (323 ) Deemed capital contribution on extinguishment of preferred stock 31,480 9,485 Net income (loss) available to common stockholders $ 25,004 $ (42,303 ) Denominator: Weighted average number of common shares outstanding, 3,700,090 1,693,365 Earnings per basic share: Net Loss $ (1.75 ) $ (30.39 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (0.19 ) Deemed capital contribution on extinguishment of preferred stock 8.51 5.60 Net income (loss) available to common stockholders $ 6.76 $ (24.98 ) Dilutive earnings per share Numerator: Net Loss $ (6,476 ) $ (51,465 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (323 ) Deemed capital contribution on extinguishment of preferred stock 31,480 9,485 Net income (loss) available to common stockholders $ 25,004 $ (42,303 ) Denominator: Weighted average basic shares outstanding, 3,700,090 1,693,365 Weighted average effect of dilutive securities Employee stock options 296 - Convertible preferred stock 130,562 - Restricted stock units 7,418 - Weighted average diluted shares outstanding 3,838,366 1,693,365 Earnings per diluted share: Net Loss $ (1.69 ) $ (30.39 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (0.19 ) Deemed capital contribution on extinguishment of preferred stock 8.20 5.60 Net income (loss) available to common stockholders $ 6.51 $ (24.98 ) Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2016 and 2015 are as follows: As of December 31, 2016 2015 Convertible preferred stock 2,926 530,277 Warrants to purchase common stock 1,251,709 2,304,888 Options to purchase common stock 309,037 289,380 Total 1,563,672 3,124,545 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Goodwill Impairment |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Estimated useful lives | The Company computes depreciation and amortization under the straight-line method and typically over the following estimated useful lives of the related assets: Office furniture and equipment 3 to 10 years Computer hardware and software 3 to 5 years |
Schedule of earnings (loss) per share | The following table summarizes the earnings (loss) per share calculation (in thousands, except per share amount): For the Years Ended December 31, 2016 2015 Basic earnings per share Numerator: Net Loss $ (6,476 ) $ (51,465 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (323 ) Deemed capital contribution on extinguishment of preferred stock 31,480 9,485 Net income (loss) available to common stockholders $ 25,004 $ (42,303 ) Denominator: Weighted average number of common shares outstanding, 3,700,090 1,693,365 Earnings per basic share: Net Loss $ (1.75 ) $ (30.39 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (0.19 ) Deemed capital contribution on extinguishment of preferred stock 8.51 5.60 Net income (loss) available to common stockholders $ 6.76 $ (24.98 ) Dilutive earnings per share Numerator: Net Loss $ (6,476 ) $ (51,465 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (323 ) Deemed capital contribution on extinguishment of preferred stock 31,480 9,485 Net income (loss) available to common stockholders $ 25,004 $ (42,303 ) Denominator: Weighted average basic shares outstanding, 3,700,090 1,693,365 Weighted average effect of dilutive securities Employee stock options 296 - Convertible preferred stock 130,562 - Restricted stock units 7,418 - Weighted average diluted shares outstanding 3,838,366 1,693,365 Earnings per diluted share: Net Loss $ (1.69 ) $ (30.39 ) Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock - (0.19 ) Deemed capital contribution on extinguishment of preferred stock 8.20 5.60 Net income (loss) available to common stockholders $ 6.51 $ (24.98 ) |
Schedule of potentially dilute loss per share | Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2016 and 2015 are as follows: As of December 31, 2016 2015 Convertible preferred stock 2,926 530,277 Warrants to purchase common stock 1,251,709 2,304,888 Options to purchase common stock 309,037 289,380 Total 1,563,672 3,124,545 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | The components of property and equipment as of December 31, 2016 and 2015, at cost are ($ in thousands): December 31, 2016 2015 Computers $ 16 $ 12 Office furniture and equipment 97 97 Leasehold improvements 229 229 Total cost 342 338 Accumulated depreciation and amortization (336 ) (333 ) Property and equipment, net $ 6 $ 5 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The net carrying amounts related to acquired intangible assets as of December 31, 2016 are as follows ($ in thousands): Net Carrying Amount Weighted average Patent Portfolios at December 31, 2014, net $ 55,004 5.62 Amortization expenses (6,317 ) Impairment loss (38,888 ) Patent Portfolios and Patent Rights at December 31, 2015, net $ 9,799 4.63 Amortization expenses (2,135 ) Impairment loss (2,713 ) Patent Portfolios and Patent Rights at December 31, 2016, net $ 4,951 3.65 |
Schedule of amortization to acquired intangible assets | The amortization expenses related to acquired intangible assets for the years ended December 31, 2016 and 2015 are as follows ($ in thousands): For the Years Ended December 31, Date Acquired and Description 2016 2015 7/24/13 - Rockstar patent portfolio $ 104 $ 303 9/10/13 - North South patent portfolio 31 84 12/31/13 - Rockstar patent portfolio 2,000 5,930 $ 2,135 $ 6,317 |
Schedule of future amortization of intangible assets | The future amortization of these intangible assets was based on the adjusted carrying amount. Future amortization of all patents is as follows ($ in thousands): Rockstar North South Rockstar Portfolio Portfolio Portfolio Acquired Acquired Acquired Total 24-Jul-13 10-Sep-13 31-Dec-13 Amortization Year Ended December 31, 2017 71 22 1,280 1,373 Year Ended December 31, 2018 71 22 1,280 1,373 Year Ended December 31, 2019 71 22 1,280 1,373 Year Ended December 31, 2020 71 22 639 732 Year Ended December 31, 2021 71 22 - 93 Thereafter 4 3 - 7 Total $ 359 $ 113 $ 4,479 $ 4,951 |
Fair Value of Financial Asset24
Fair Value of Financial Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value assets and liabilities | The following table presents the Company's assets and liabilities that are measured at fair value at December 31, 2016 and 2015 ($ in thousands): Fair value measured at December 31, 2016 Total carrying value Quoted prices in Significant other Significant 2016 (Level 1) (Level 2) (Level 3) Assets Marketable securities - corporate bonds $ 6,025 $ 211 $ 5,814 $ - Liabilities Fair value of warrant liabilities $ 702 $ - $ - $ 702 Fair value measured at December 31, 2015 Total carrying value Quoted prices in Significant other Significant 2015 (Level 1) (Level 2) (Level 3) Assets Marketable securities - mutual funds $ 3,392 $ 3,392 $ - $ - Liabilities Fair value of warrant liabilities $ 2,959 $ - $ - $ 2,959 |
Schedule of fair value assumptions | A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and as of December 31, 2016 and 2015 is as follows: Date of valuation December 31, 2016 December 31, 2015 Risk-free interest rate 1.93% 0.16% - 1.76% Expected volatility 100% - 133.79% 100% - 115.35% Expected life (in years) 3.93 - 4.06 0.3 - 5.1 Expected dividend yield - - |
Schedule of fair value of the company's level 3 financial liabilities | The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis for the year ended December 31, 2016 and 2015 ($ in thousands): Fair Value of Level 3 financial liabilities December 31, December 31, Beginning balance $ 2,959 $ - Recognition of warrant liabilities - 3,228 Fair value adjustment of warrant liabilities (2,257 ) (269 ) Ending balance $ 702 $ 2,959 |
RPX License Agreement (Tables)
RPX License Agreement (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Rpx License Agreement Tables | |
Schedule of licence agreement | A summary of information with respect the RPX transaction on May 23, 2016 is as follows: Assumptions Stock price on May 22, 2016 $ 2.06 Series H Assumptions Series H Shares 381,967 Series H - Liquidation preference $ 83.50 Series H -Carrying value $ 31,894,245 Equivalent common shares - Series H 201,035 Fair Value of Series H preferred $ 414,133 Contribution/Deemed dividend $ 31,480,112 |
Stockholders' Equity and Rede26
Stockholders' Equity and Redeemable Convertible Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of designated separate series of capital stock | The Company had designated separate series of its capital stock as of December 31, 2016 and December 31, 2015 as summarized below: Number of Shares Issued and Outstanding as of December 31, December 31, Par Value Conversion Ratio Series "A" - - $ 0.0001 N/A Series "C" - - 0.0001 0.05:1 Series “D" 4,725 4,725 0.0001 0.53:1 Series “D-1" 834 834 0.0001 0.53:1 Series “F-1" - - 0.0001 0.05:1 Series “H" - 381,967 0.0001 0.53:1 Series “I” - - 0.0001 1.05:1 Series “J” - - 0.0001 0.05:1 Series “K” - 1,240 0.0001 263.16:1 |
Schedule of warrant activity | A summary of warrant activity for year ended December 31, 2016 is presented below: Warrants Weighted Average Total Intrinsic Value Weighted Average Outstanding as of December 31, 2015 2,304,888 $ 7.98 $ - 2.83 Exercised (200,000 ) 3.80 Expired (854,577 ) - Outstanding as of December 31, 2016 1,250,311 $ 9.21 3.91 Exercisable as of December 31, 2016 1,250,311 $ 9.21 $ - 3.91 |
Schedule of fair value of options granted | The fair value of options granted in 2016 and 2015 was estimated using the following assumptions: For the Years Ended December 31, 2016 2015 Exercise price $1.42 - $1.98 $4.18 - $32.87 Expected stock price volatility 122.4% - 141.3% 117.2% - 130.4% Risk-free rate of interest 0.96% - 1.15% 0.74% - 1.08% Term (years) 4.34 - 9.65 1.9 - 3.0 |
Schedule of option activity | A summary of option activity under the Company’s employee stock option plan for year ended December 31, 2016 is presented below: Number of Shares Weighted Average Total Intrinsic Value Weighted Average Outstanding as of December 31, 2015 286,487 $ 89.07 $ - 5.0 Employee options granted 23,682 1.89 - 5.2 Employee options expired (78 ) - Outstanding as of December 31, 2016 310,091 $ 82.25 $ - 4.1 Options vested and expected to vest 310,091 $ 82.25 $ - 4.1 Options vested and exercisable 302,199 $ 84.35 $ - 4.1 A summary of options that the Company granted to non-employees for the year ended December 31, 2016 is presented below: Number of Shares Weighted Average Total Intrinsic Value Weighted Average Outstanding as of December 31, 2015 2,893 $ 98.07 $ - 5.4 Non-employee options granted - - - - Outstanding as of December 31, 2016 2,893 $ 98.07 $ - 4.4 Options vested and expected to vest 2,893 $ 98.07 $ - 4.4 Options vested and exercisable 2,893 $ 98.07 $ - 4.4 |
Schedule of restricted stock award activity | A summary of the restricted stock award activity for the year ended December 31, 2016 is as follows: Number of Units Weighted Average Nonvested at December 31, 2015 - $ - Granted 287,085 1.86 Vested (287,085 ) 1.86 Nonvested at December 31, 2016 - $ - |
Schedule of restricted stock units activity | A summary of the restricted stock award activity for the year ended December 31, 2016 is as follows: Number of Units Weighted Average Nonvested at December 31, 2015 - $ - Granted 118,512 1.08 Vested (59,256 ) - Forfeited (59,256 ) - Nonvested at December 31, 2016 - $ - |
Schedule of stock-based compensation | Stock-based compensation expense for the year ended December 31, 2016 and 2015 was comprised of the following ($ in thousands): For the Years Ended December 31, 2016 2015 Employee restricted stock units $ 121 $ - Employee restricted stock awards 151 132 Employee stock option awards 35 155 Non-employee restricted stock awards 255 84 Total compensation expense $ 562 $ 371 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum rental payments | Future minimum rental payments required as of December 31, 2016, including Bethesda office lease obligation are as follows ($ in thousands): Lease Payments Year Ended December 31, 2017 220 Year Ended December 31, 2018 45 $ 265 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income tax (benefit) provision | The income tax provision consists of the following ($ in thousands): dollars in thousands As of December 31, 2016 2015 Federal Current $ - $ - Deferred 3,578 16,374 Increase in valuation allowance 3,578 (16,374 ) State and local Current - - Deferred (50 ) 837 Increase in valuation allowance 50 (837 ) Change in Valuation Allowance (3,578 ) (17,211 ) Income Tax Provision (Benefit) $ - - |
Schedule of Reconciliation of the expected tax expense (benefit) | The following is a reconciliation of the U.S. federal statutory rate to the effective income tax rates for the years ended December 31, 2016 and 2015: For the years ended December 31, 2016 2015 U.S. Statutory Federal Rate 34.00 % 34.00 % State Taxes, Net of Federal Tax Benefit 2.97 % 2.52 % Other Permanent Differencee 1.01 % 0.01 % State rate change effect 6.88 % -0.75 % Fair Value of Warrants 11.85 % 0.00 % Increase due to change in NOL and other true ups (1.47 )% -2.35 % Change in Valuation Allowance - 55.25 % -33.43 % Income Taxes Provision (Benefit) 0.0 0.0 |
Schedule of deferred tax assets and liabilities | At December 31, 2016 and 2015, the Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following ($ in thousands): dollars in thousands As of December 31, 2016 2015 Deferred tax assets: Net-operating loss carryforward $ 12,971 $ 10,290 Stock based compensation 8,413 8,101 Patent portfolio and other 17,796 17,211 Total Deferred Tax Assets 39,180 35,602 Valuation allowance (39,180 ) (35,602 ) Deferred Tax Asset, Net of Allowance $ - $ - |
Organization and Description 29
Organization and Description of Business (Details Narrative) - $ / shares | Mar. 04, 2016 | Feb. 26, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Description of reverse stock split | 1-for-19 | 1-for-12 to 1-for-24 | ||
Common stock, authorized | 100,000,000 | 100,000,000 | 100,000,000 | |
Common stock, authorized previously | 200,000,000 | |||
Common stock, outstanding | 2,539,847 | 4,943,929 | 2,539,847 | |
Common stock, outstanding previously | 48,259,430 | |||
Minimum [Member] | ||||
Closing bid price | $ 1 |
Liquidity and Financial Condi30
Liquidity and Financial Condition (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 08, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Working capital deficit | $ 3,600 | ||
Net loss | (6,476) | $ (51,465) | |
Accumulated deficits | (141,749) | $ (135,273) | |
Value of shares issued | $ 2,140 | ||
Underwriting Agreement [Member] | IPO [Member] | |||
Number of shares issued | 1,592,357 | ||
Shares issued price per share | $ 1.57 | ||
Additional shares | 231,349 | ||
Value of shares issued | $ 2,100 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Computer hardware and software [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Computer hardware and software [Member] | Maximum [Member] | |
Property and equipment useful life | 5 years |
Office furniture and equipment [Member] | Minimum [Member] | |
Property and equipment useful life | 3 years |
Office furniture and equipment [Member] | Maximum [Member] | |
Property and equipment useful life | 10 years |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | ||
Net Loss | $ (6,476) | $ (51,465) |
Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock | (323) | |
Deemed capital contribution on extinguishment of preferred stock | 31,480 | 9,485 |
Net income (loss )available to common stockholders | $ 25,004 | $ (42,303) |
Denominator: | ||
Weighted average number of common shares outstanding, | 3,700,090 | 1,693,365 |
Earnings per basic share: | ||
Net Loss | $ (1.75) | $ (30.39) |
Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock | (0.19) | |
Deemed capital contribution on extinguishment of preferred stock | 8.51 | 5.6 |
Net income (loss) available to common stockholders | $ 6.76 | $ (24.98) |
Numerator: | ||
Net Loss | $ (6,476) | $ (51,465) |
Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock | (323) | |
Deemed capital contribution on extinguishment of preferred stock | 31,480 | 9,485 |
Net income (loss) income available to common stockholders | $ 25,004 | $ (42,303) |
Denominator: | ||
Weighted average basic shares outstanding, | 3,700,090 | 1,693,365 |
Weighted average effect of dilutive securities | ||
Employee stock options | 296 | |
Convertible preferred stock | 130,562 | |
Restricted stock units | 7,418 | |
Weighted average diluted shares outstanding | 3,838,366 | 1,693,365 |
Earnings per diluted share: | ||
Net Loss | $ (1.69) | $ (30.39) |
Deemed dividend related to immediate accretion of beneficial conversion feature of convertible preferred stock | (0.19) | |
Deemed capital contribution on extinguishment of preferred stock | 8.2 | 5.6 |
Net income (loss) available to common stockholders | $ 6.51 | $ (24.98) |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details 2) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Potentially dilute securities excluded from calculation | 1,563,672 | 3,124,545 |
Options to purchase common stock [Member] | ||
Potentially dilute securities excluded from calculation | 309,037 | 289,380 |
Convertible preferred stock [Member] | ||
Potentially dilute securities excluded from calculation | 2,926 | 530,277 |
Warrants to purchase common stock [Member] | ||
Potentially dilute securities excluded from calculation | 1,251,709 | 2,304,888 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016USD ($)Number | Dec. 31, 2015USD ($) | |
Number of operating segment | Number | 1 | |
Cash and cash equivalents | $ 100 | $ 100 |
Realized loss on marketable securities | 95 | 91 |
Unrealized loss and gain on marketable securities | (243) | 19 |
Dividend income | 19 | 52 |
Costs of marketable securities | 6,000 | 3,400 |
Additional intangible assets impairment charges | $ 2,700 | 38,900 |
Godwill impairment charge | $ 1,700 | |
Minimum [Member] | ||
Weighted average remaining vesting period | 1 year | |
Maximum [Member] | ||
Weighted average remaining vesting period | 5 years |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Computers | $ 16 | $ 12 |
Office furniture and equipment | 97 | 97 |
Leasehold improvements | 229 | 229 |
Total cost | 342 | 338 |
Accumulated depreciation and amortization | (336) | (333) |
Property and equipment, net | $ 6 | $ 5 |
Property and Equipment (Detai36
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 2,592 | $ 1,089 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Patent Portfolios and Patent Rights at beginning, net | $ 9,799 | ||
Patent Portfolios and Patent Rights at ending, net | 4,951 | $ 9,799 | |
Patents [Member] | |||
Patent Portfolios and Patent Rights at beginning, net | 9,799 | 55,004 | |
Amortization expenses | (2,135) | (6,317) | |
Impairment loss | (2,713) | (38,888) | |
Patent Portfolios and Patent Rights at ending, net | $ 4,951 | $ 9,799 | $ 55,004 |
Weighted average amortization period | 3 years 7 months 24 days | 4 years 7 months 17 days | 5 years 7 months 13 days |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Amortization Expense | $ 2,135 | $ 6,317 |
7/24/13 - Rockstar Patent Portfolio Acquired [Member] | ||
Amortization Expense | 104 | 303 |
9/10/13 - North South patent portfolio Acquired [Member] | ||
Amortization Expense | 31 | 84 |
12/31/13 - Rockstar Patent Portfolio Acquired [Member] | ||
Amortization Expense | $ 2,000 | $ 5,930 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Year Ended December 31, 2017 | $ 1,373 | |
Year Ended December 31, 2018 | 1,373 | |
Year Ended December 31, 2019 | 1,373 | |
Year Ended December 31, 2020 | 732 | |
Year Ended December 31, 2021 | 93 | |
Thereafter | 7 | |
Total | 4,951 | $ 9,799 |
7/24/13 - Rockstar Patent Portfolio Acquired [Member] | ||
Year Ended December 31, 2017 | 71 | |
Year Ended December 31, 2018 | 71 | |
Year Ended December 31, 2019 | 71 | |
Year Ended December 31, 2020 | 71 | |
Year Ended December 31, 2021 | 71 | |
Thereafter | 4 | |
Total | 359 | |
9/10/13 - North South patent portfolio Acquired [Member] | ||
Year Ended December 31, 2017 | 22 | |
Year Ended December 31, 2018 | 22 | |
Year Ended December 31, 2019 | 22 | |
Year Ended December 31, 2020 | 22 | |
Year Ended December 31, 2021 | 22 | |
Thereafter | 3 | |
Total | 113 | |
12/31/13 - Rockstar Patent Portfolio Acquired [Member] | ||
Year Ended December 31, 2017 | 1,280 | |
Year Ended December 31, 2018 | 1,280 | |
Year Ended December 31, 2019 | 1,280 | |
Year Ended December 31, 2020 | 639 | |
Year Ended December 31, 2021 | ||
Thereafter | ||
Total | $ 4,479 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Fair value of the patent portfolio | $ 14,600 | $ 5,000 | $ 9,800 |
Impairment charge of patent portfolio | $ 35,500 | ||
Additional impairment charge of patent portfolio | 2,700 | 3,400 | |
Amortization of patent portfolio | $ 5,000 | $ 9,800 | |
Weighted average life in years | 3 years 7 months 24 days | 4 years 7 months 17 days |
Fair Value of Financial Asset41
Fair Value of Financial Assets and Liabilitiest (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||
Marketable securities -corporate bonds | $ 6,025 | |
Marketable securities - mutual funds | $ 3,392 | |
Liabilities | ||
Fair value of warrant liabilities | 702 | 2,959 |
Level 1 [Member] | ||
Assets | ||
Marketable securities -corporate bonds | 211 | |
Marketable securities - mutual funds | 3,392 | |
Fair Value, Inputs, Level 2 [Member] | ||
Assets | ||
Marketable securities -corporate bonds | 5,814 | |
Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Marketable securities -corporate bonds | ||
Liabilities | ||
Fair value of warrant liabilities | $ 702 | $ 2,959 |
Fair Value of Financial Asset42
Fair Value of Financial Assets and Liabilities (Details 1) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Risk-free interest rate | 1.93% | |
Maximum [Member] | ||
Risk-free interest rate | 1.76% | |
Expected volatility | 100.00% | 115.35% |
Expected life (in years) | 4 years 22 days | 5 years 1 month 6 days |
Minimum [Member] | ||
Risk-free interest rate | 0.16% | |
Expected volatility | 133.79% | 100.00% |
Expected life (in years) | 3 years 11 months 5 days | 3 months 18 days |
Fair Value of Financial Asset43
Fair Value of Financial Assets and Liabilities (Details 2) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 2,959 | |
Recognition of warrant liabilities | $ 3,228 | |
Fair value adjustments for warrant liabilities | (2,257) | (269) |
Ending balance | $ 702 | $ 2,959 |
Fair Value of Financial Asset44
Fair Value of Financial Assets and Liabilities (Details Narrative) - $ / shares | Dec. 07, 2015 | Dec. 07, 2015 | Jul. 21, 2015 |
July 2015 Financing [Member] | |||
Common stock warrants purchase | 370,263 | ||
Warrants exercisable date | Jan. 22, 2016 | ||
Warrants exercise price per share | $ 8.17 | ||
Series B [Member] | |||
Common stock warrants purchase | 842,099 | 842,099 | |
Warrants exercisable date | Dec. 6, 2020 | ||
Warrants exercise price per share | $ 4.75 | $ 4.75 | |
Series A [Member] | |||
Common stock warrants purchase | 1,052,624 | 1,052,624 | |
Warrants exercisable date | May 6, 2016 | ||
Warrants exercise price per share | $ 3.80 | $ 3.80 |
RPX License Agreement (Details)
RPX License Agreement (Details) - USD ($) $ / shares in Units, $ in Thousands | May 23, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 |
Series H Assumptions | ||||
Contribution/Deemed dividend | $ 323 | |||
Series H Convertible Preferred Stock [Member] | ||||
Series H Assumptions | ||||
Series H - Liquidation preference | $ 83.50 | |||
RPX Corporation [Member] | Series H Convertible Preferred Stock [Member] | ||||
Series H Assumptions | ||||
Series H - Liquidation preference | $ 83.50 | |||
Contribution/Deemed dividend | $ 31,480,112 | |||
Second Patent License Agreement [Member] | RPX Corporation [Member] | Series H Convertible Preferred Stock [Member] | ||||
Assumptions | ||||
Stock price on May 22, 2016 | $ 2.06 | |||
Series H Assumptions | ||||
Series H Shares | 381,967 | |||
Series H -Carrying value | $ 31,894,245 | |||
Equivalent common shares - Series H | 201,035 | |||
Fair Value of Series H preferred | $ 414,133 |
RPX License Agreement (Details
RPX License Agreement (Details Narative) | May 23, 2016USD ($)shares | Nov. 23, 2015USD ($)Numbershares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Number of shares cancelled,value | ||||
Extinguishment preferred stock | $ 31,480,000 | 9,485,000 | ||
Capital contribution | 323,000 | |||
Long term deferred revenue | 3,245,000 | 259,000 | ||
RPX Corporation [Member] | Series H Convertible Preferred Stock [Member] | ||||
License revenue | 587,000 | |||
Extinguishment preferred stock | 31,900,000 | |||
Fair value of preferred stock | 414,000 | |||
Cash received from related party | 4,400,000 | |||
Capital contribution | 31,500,000 | |||
Short term deferred revenue | 1,100,000 | |||
Long term deferred revenue | $ 3,700,000 | |||
Deferred revenue amortized service period | 5 years | |||
Patent License Agreement [Member] | RPX Corporation [Member] | ||||
Number of patent | Number | 101 | |||
Cash to acquire business | $ 300,000 | |||
Agreement term | 2 years | |||
License revenue | $ 600,000 | $ 290,000 | $ 31,000 | |
Patent License Agreement [Member] | RPX Corporation [Member] | Series I Redeemable Convertible Preferred Stock [Member] | ||||
Mandatory redemption payment | $ 5,000,000 | |||
Patent License Agreement [Member] | RPX Corporation [Member] | Series H Convertible Preferred Stock [Member] | ||||
Number of shares cancelled | shares | 57,076 | |||
Number of shares cancelled,value | $ 4,765,846 | |||
Percentage of shares cancellation | 13.00% | |||
Second Patent License Agreement [Member] | RPX Corporation [Member] | ||||
License revenue | $ 4,355,000 | |||
Second Patent License Agreement [Member] | RPX Corporation [Member] | Series H Convertible Preferred Stock [Member] | ||||
Number of shares cancelled | shares | 381,967 | |||
Number of shares cancelled,value | $ 31,894,244 | |||
Percentage of shares cancellation | 100.00% | |||
Separate Agreement [Member] | RPX Corporation [Member] | VTech Telecommunications Ltd. [Member] | ||||
License revenue | $ 20,000 |
Stockholders' Equity and Rede47
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 02, 2015 | Dec. 31, 2013 | |
Preferred stock, par value (in dolars per share) | $ 0.0001 | $ 0.0001 | ||
Series A [Member] | ||||
Preferred stock, issued | ||||
Preferred stock,outstandig | ||||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | - | |||
Series "C" [Member] | ||||
Preferred stock, issued | ||||
Preferred stock,outstandig | ||||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | 0.05:1 | |||
Series "D" [Member] | ||||
Preferred stock, issued | 4,725 | 4,725 | ||
Preferred stock,outstandig | 4,725 | 4,725 | ||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | 0.53:1 | |||
Series "D-1" [Member] | ||||
Preferred stock, issued | 834 | 834 | ||
Preferred stock,outstandig | 834 | 834 | ||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | 0.53:1 | |||
Series "F-1" [Member] | ||||
Preferred stock, issued | ||||
Preferred stock,outstandig | ||||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | 0.05:1 | |||
Series H Convertible Preferred Stock [Member] | ||||
Preferred stock, issued | 381,967 | |||
Preferred stock,outstandig | 381,967 | |||
Preferred stock, par value (in dolars per share) | $ 0.0001 | $ 83.50 | ||
Conversion Ratio | 0.53:1 | |||
Series "I" [Member] | ||||
Preferred stock, issued | ||||
Preferred stock,outstandig | ||||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | 1.05:1 | |||
Series "J" [Member] | ||||
Preferred stock, issued | ||||
Preferred stock,outstandig | ||||
Preferred stock, par value (in dolars per share) | $ 0.0001 | |||
Conversion Ratio | 0.05:1 | |||
Series K Convertible Preferred Stock [Member] | ||||
Preferred stock, issued | 1,240 | |||
Preferred stock,outstandig | 1,240 | |||
Preferred stock, par value (in dolars per share) | $ 0.0001 | $ 1,000 | ||
Conversion Ratio | 263.16:1 |
Stockholders' Equity and Rede48
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details 1) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Outstanding at beginnning | shares | 2,304,888 |
Exercised | shares | (200,000) |
Expired | shares | (854,577) |
Outstanding at ending | shares | 1,250,311 |
Exercisable at ending | shares | 1,250,311 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Outstanding at beginnning | $ / shares | $ 7.98 |
Exercised | $ / shares | 3.80 |
Expired | $ / shares | |
Outstanding at ending | $ / shares | 9.21 |
Exercisable at ending | $ / shares | $ 9.21 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value [Roll Forward] | |
Outstanding at beginnning | $ | |
Outstanding at ending | $ | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Remaining Contractual Life [Roll Forward] | |
Outstanding at beginnning | 2 years 9 months 29 days |
Outstanding at ending | 3 years 10 months 28 days |
Exercisable at ending | 3 years 10 months 28 days |
Stockholders' Equity and Rede49
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details 2) - Stock Option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Minimum [Member] | ||
Exercise price | $ 1.42 | $ 4.18 |
Expected stock price volatility | 122.40% | 117.20% |
Risk-free rate of interest | 0.96% | 0.74% |
Term (years) | 4 years 4 months 2 days | 1 year 10 months 24 days |
Maximum [Member] | ||
Exercise price | $ 1.98 | $ 32.87 |
Expected stock price volatility | 141.30% | 130.40% |
Risk-free rate of interest | 1.15% | 1.08% |
Term (years) | 9 years 7 months 24 days | 3 years |
Stockholders' Equity and Rede50
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details 3) - Stock Option [Member] | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Employee [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number of Shares [Roll Forward] | |
Outstanding at beginning | shares | 286,487 |
Employee options granted | shares | 23,682 |
Employee options expired | shares | (78) |
Outstanding at ending | shares | 310,091 |
Options vested and expected to vest | shares | 310,091 |
Options vested and exercisable | shares | 302,199 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 89.07 |
Employee options granted | $ / shares | 1.89 |
Employee options expired | $ / shares | |
Outstanding at ending | $ / shares | 82.25 |
Options vested and expected to vest | $ / shares | 82.25 |
Options vested and exercisable | $ / shares | $ 84.35 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Total Intrinsic Value [Roll Forward] | |
Outstanding at beginning | $ | |
Employee options granted | $ | |
Outstanding at ending | $ | |
Options vested and expected to vest | $ | |
Options vested and exercisable | $ | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Life [Roll Forward] | |
Outstanding at beginning | 5 years |
Employee options granted | 5 years 2 months 12 days |
Outstanding at ending | 4 years 1 month 6 days |
Options vested and expected to vest | 4 years 1 month 6 days |
Options vested and exercisable | 4 years 1 month 6 days |
Non-Employee [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number of Shares [Roll Forward] | |
Outstanding at beginning | shares | 2,893 |
Employee options granted | shares | |
Outstanding at ending | shares | 2,893 |
Options vested and expected to vest | shares | 2,893 |
Options vested and exercisable | shares | 2,893 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 98.07 |
Employee options granted | $ / shares | |
Outstanding at ending | $ / shares | 98.07 |
Options vested and expected to vest | $ / shares | 98.07 |
Options vested and exercisable | $ / shares | $ 98.07 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Total Intrinsic Value [Roll Forward] | |
Outstanding at beginning | $ | |
Employee options granted | $ | |
Outstanding at ending | $ | |
Options vested and expected to vest | $ | |
Options vested and exercisable | $ | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Life [Roll Forward] | |
Outstanding at beginning | 5 years 4 months 24 days |
Outstanding at ending | 4 years 4 months 24 days |
Options vested and expected to vest | 4 years 4 months 24 days |
Options vested and exercisable | 4 years 4 months 24 days |
Stockholders' Equity and Rede51
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details 4) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Units [Roll Forward] | ||
Nonvested at beginning | ||
Granted | 287,085 | |
Vested | (287,085) | |
Forfeited | ||
Nonvested at ending | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Day Fair Value [Roll Forward] | ||
Nonvested at beginning | ||
Granted | 1.86 | |
Vested | 1.86 | |
Forfeited | ||
Nonvested at ending | ||
Restricted Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Units [Roll Forward] | ||
Nonvested at beginning | ||
Granted | 118,512 | |
Vested | (59,256) | |
Forfeited | (59,256) | |
Nonvested at ending | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Day Fair Value [Roll Forward] | ||
Nonvested at beginning | ||
Granted | 1.08 | |
Vested | ||
Forfeited | ||
Nonvested at ending |
Stockholders' Equity and Rede52
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details 5) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Total compensation expense | $ 562 | $ 371 |
Restricted Stock Units [Member] | Employee [Member] | ||
Total compensation expense | 121 | |
Restricted Stock [Member] | Employee [Member] | ||
Total compensation expense | 151 | 132 |
Restricted Stock [Member] | Non-Employee [Member] | ||
Total compensation expense | 255 | 84 |
Stock Option [Member] | Employee [Member] | ||
Total compensation expense | $ 35 | $ 155 |
Stockholders' Equity and Rede53
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 08, 2016 | Mar. 04, 2016 | Feb. 26, 2016 | Dec. 07, 2015 | Dec. 02, 2015 | Jul. 21, 2015 | Jul. 15, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Description of reverse stock split | 1-for-19 | 1-for-12 to 1-for-24 | ||||||||
Common stock, authorized | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||||||
Common stock, authorized previously | 200,000,000 | |||||||||
Number of preferred stock authorized | 50,000,000 | 50,000,000 | 50,000,000 | |||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Value of shares issued | $ 2,140 | |||||||||
Net proceeds form offering | $ 1,322 | |||||||||
Series K Preferred Stock [Member] | ||||||||||
Number of preferred stock authorized | 1,240 | |||||||||
Deemed dividend related to beneficial conversion feature | $ 323 | $ 323 | ||||||||
July 2015 Financing [Member] | ||||||||||
Net proceeds form offering | $ 1,300 | |||||||||
July 2015 Financing [Member] | Warrant [Member] | ||||||||||
Net proceeds form offering | $ 985 | |||||||||
December 2015 Offering [Member] | ||||||||||
Net proceeds form offering | $ 3,400 | |||||||||
December 2015 Offering [Member] | Series K Preferred Stock [Member] | ||||||||||
Number of shares issued | 1,240 | |||||||||
December 2015 Offering [Member] | Warrant [Member] | ||||||||||
Net proceeds form offering | $ 2,200 | |||||||||
December 2015 Offering [Member] | Series A Warrants [Member] | ||||||||||
Common stock warrants purchase | 326,313 | 326,313 | ||||||||
Exercise price (in dollars per share) | $ 3.80 | $ 3.80 | ||||||||
December 2015 Offering [Member] | Series A Warrants [Member] | Minimum [Member] | ||||||||||
Warrants exercisable date | Dec. 7, 2015 | |||||||||
December 2015 Offering [Member] | Series A Warrants [Member] | Maximum [Member] | ||||||||||
Warrants exercisable date | May 6, 2016 | |||||||||
December 2015 Offering [Member] | Series B Warrants [Member] | ||||||||||
Common stock warrants purchase | 261,051 | 261,051 | ||||||||
Exercise price (in dollars per share) | $ 4.75 | $ 4.75 | ||||||||
December 2015 Offering [Member] | Series B Warrants [Member] | Minimum [Member] | ||||||||||
Warrants exercisable date | Dec. 7, 2015 | |||||||||
December 2015 Offering [Member] | Series B Warrants [Member] | Maximum [Member] | ||||||||||
Warrants exercisable date | Dec. 6, 2020 | |||||||||
Underwriting Agreement [Member] | IPO [Member] | ||||||||||
Number of shares issued | 1,592,357 | |||||||||
Common stock, par value (in dollars per share) | $ 1.57 | |||||||||
Additional number of shares issued | $ 231,349 | |||||||||
Value of shares issued | $ 2,100 | |||||||||
Placement Agency Agreement [Member] | July 2015 Financing [Member] | Chardan Capital Markets, LLC ("Placement Agent") [Member] | ||||||||||
Percentage of cash fee of gross proceeds | 8.00% | |||||||||
Payment for issuance cost | $ 25 | |||||||||
Placement Agency Agreement [Member] | July 2015 Financing [Member] | Chardan Capital Markets, LLC ("Placement Agent") [Member] | Institutional Investors [Member] | ||||||||||
Number of shares issued | 301,026 | |||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | |||||||||
Placement Agency Agreement [Member] | July 2015 Financing [Member] | Chardan Capital Markets, LLC ("Placement Agent") [Member] | Institutional Investors [Member] | Warrant [Member] | ||||||||||
Common stock warrants purchase | 370,263 | |||||||||
Securities Purchase Agreement [Member] | July 2015 Financing [Member] | Institutional Investors [Member] | ||||||||||
Description of units | Each unit consisting of one-nineteenth of an Offered Share and a warrant to purchase 0.06 shares of Common Stock. | |||||||||
Price of per unit (in dollars per unit) | $ 4.864 | |||||||||
Securities Purchase Agreement [Member] | July 2015 Financing [Member] | Institutional Investors [Member] | Warrant [Member] | ||||||||||
Common stock warrants purchase | 0.06 | |||||||||
Exercise price (in dollars per share) | $ 8.17 | |||||||||
Warrants exercisable date | Jan. 22, 2016 | |||||||||
Warramt term | 5 years | |||||||||
Description of warrant terms | Least 61 days’ prior notice from the holder to the Company, the holder will not have the right to exercise any portion of the Warrant if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of the Company’s common stock (including securities convertible into common stock) outstanding immediately after the exercise; provided, however, that the holder may not increase this limitation at any time in excess of 9.99%. | |||||||||
Purchase Agreement [Member] | December 2015 Offering [Member] | Institutional Investors [Member] | Class A Units [Member] | ||||||||||
Number of shares issued | 13,800 | |||||||||
Description of units | Consisting of one-nineteenth of a share of Common Stock, a Series A Warrant and a Series B | |||||||||
Purchase Agreement [Member] | December 2015 Offering [Member] | Institutional Investors [Member] | Class B Units [Member] | ||||||||||
Number of shares issued | 1,240 | |||||||||
Description of units | One share of Series K Preferred Stock, with a stated value of $1,000 per share and convertible into shares of Common Stock (on a 1 for 263 basis). | |||||||||
Employment Agreement [Member] | Mr. Frank Reiner [Member] | ||||||||||
Number of non-option shares granted | 60,000 | |||||||||
Employment Agreement [Member] | Mr. Darrell Dotson [Member] | ||||||||||
Number of non-option shares granted | 91,255 |
Stockholders' Equity and Rede54
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details Narrative 1) - USD ($) | May 23, 2016 | Dec. 07, 2015 | Dec. 02, 2015 | Nov. 23, 2015 | May 28, 2014 | Dec. 31, 2013 | Nov. 22, 2013 | Mar. 06, 2013 | Jan. 02, 2013 | Dec. 31, 2015 | Jun. 30, 2015 | Sep. 30, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 |
Number of preferred stock authorized | 50,000,000 | 50,000,000 | 50,000,000 | ||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Value of shares issued | $ 2,140,000 | ||||||||||||||
Number of shares cancelled,value | |||||||||||||||
Net proceeds form offering | $ 1,322,000 | ||||||||||||||
December 2015 Offering [Member] | |||||||||||||||
Net proceeds form offering | $ 3,400,000 | ||||||||||||||
December 2015 Offering [Member] | Warrant [Member] | |||||||||||||||
Net proceeds form offering | $ 2,200,000 | ||||||||||||||
Series J Preferred Stock [Member] | |||||||||||||||
Number of preferred stock authorized | 20,000,000 | ||||||||||||||
Preferred stock, par value (in dollars per share) | 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Description of prefered stock voting rights | Each holder of Series J Preferred Stock is entitled to vote on all matters submitted to stockholders of the Company and is entitled to a vote of 67.3% of the number of votes for each share of Common Stock into which the Series J Preferred Stock is convertible owned at the record date for the determination of stockholders entitled to vote on such matter. | ||||||||||||||
Preferred stock issued | |||||||||||||||
Preferred stock outstanding | |||||||||||||||
Series J Preferred Stock [Member] | Placement Agency Agreement [Member] | Direct Public Offering [Member] | Laidlaw & Company (UK) Ltd. [Member] | |||||||||||||||
Number of shares issued in offering | 10,000,000 | ||||||||||||||
Public offering price (in dollars per share) | $ 2 | ||||||||||||||
Net proceeds form offering | $ 18,400,000 | ||||||||||||||
Aggregate conversion shares | 526,315 | ||||||||||||||
Legal fees | $ 180,000 | ||||||||||||||
Placement agent fees | 1,320,000 | ||||||||||||||
Escrow fees | $ 40,000 | ||||||||||||||
Series K Preferred Stock [Member] | |||||||||||||||
Number of preferred stock authorized | 1,240 | ||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 | $ 1,000 | ||||||||||||
Preferred stock issued | 1,240 | 1,240 | 1,240 | ||||||||||||
Preferred stock outstanding | 1,240 | 1,240 | 1,240 | ||||||||||||
Series K Preferred Stock [Member] | December 2015 Offering [Member] | |||||||||||||||
Number of shares issued | 1,240 | ||||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Number of shares issued | 500,000 | ||||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock issued | |||||||||||||||
Preferred stock outstanding | |||||||||||||||
Series A Preferred Stock [Member] | Stockholder Rights Plan [Member] | |||||||||||||||
Description of rights to purchase | Distributed as a dividend at the rate of one right for each share of common stock. | ||||||||||||||
Description of units | Each right entitles the registered holder to purchase nineteen one-hundredths of a share (a “Unit”) of the Company’s Series A Preferred Stock. | ||||||||||||||
Description of dividend preference | Each Unit of Series A Preferred Stock will be entitled to an aggregate dividend of 100 times the dividend declared per share of common stock. | ||||||||||||||
Rights redeem (in dollars per share) | $ 0.001 | ||||||||||||||
Rights expiration date | Dec. 31, 2017 | ||||||||||||||
Series C Preferred Stock [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock issued | |||||||||||||||
Preferred stock outstanding | |||||||||||||||
Series C Preferred Stock [Member] | Warrant Exchange Agreements [Member] | Institutional Investors [Member] | November 2012 Private Placement [Member] | Warrant [Member] | |||||||||||||||
Common stock warrants exchanged | 229,337 | ||||||||||||||
Description of stock conversion terms | Convertible into one-nineteenth of a share of Common Stock at the option of the holder. | ||||||||||||||
Series D Preferred Stock [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock issued | 4,725 | 4,725 | 4,725 | ||||||||||||
Preferred stock outstanding | 4,725 | 4,725 | 4,725 | ||||||||||||
Series D Preferred Stock [Member] | North South Patent Portfolio Acquired 9/10/13 [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||||||||||||||
Number of shares issued | 1,379,685 | ||||||||||||||
Description of stock conversion terms | Convertible into ten-nineteenths of a share of Common Stock. | ||||||||||||||
Series D-1 Preferred Stock [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||
Description of stock conversion terms | Convertible into ten- nineteenths of a share of Common Stock. | ||||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock issued | 834 | 834 | 834 | ||||||||||||
Preferred stock outstanding | 834 | 834 | 834 | ||||||||||||
Series F-1 Preferred Stock [Member] | |||||||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||||||||||||||
Description of stock conversion terms | Convertible, at the option of the holder at any time, into one-nineteenth of a share of Common Stock. | ||||||||||||||
Preferred stock issued | |||||||||||||||
Preferred stock outstanding | |||||||||||||||
Series H Convertible Preferred Stock [Member] | |||||||||||||||
Number of preferred stock authorized | 459,043 | 459,043 | |||||||||||||
Preferred stock, par value (in dollars per share) | $ 83.50 | $ 0.0001 | $ 83.50 | ||||||||||||
Number of shares issued | 459,043 | ||||||||||||||
Value of shares issued | $ 38,300,000 | ||||||||||||||
Description of stock conversion terms | Each share of Series H Preferred Stock is convertible into ten-nineteenths of a share of Common Stock. | ||||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 83.50 | $ 83.50 | |||||||||||||
Description of prefered stock voting rights | Holders of the Series H Preferred Stock shall be entitled to vote on all matters submitted to the Companys stockholders and shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series H Preferred Stock are convertible, subject to applicable beneficial ownership limitations. | ||||||||||||||
Number of shares converted | 10,526 | ||||||||||||||
Number of preferred stock converted | 20,000 | ||||||||||||||
Preferred stock issued | 381,967 | 381,967 | |||||||||||||
Preferred stock outstanding | 381,967 | 381,967 | |||||||||||||
Series H Convertible Preferred Stock [Member] | RPX Corporation [Member] | |||||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 83.50 | ||||||||||||||
Series H Convertible Preferred Stock [Member] | Patent License Agreement [Member] | RPX Corporation [Member] | |||||||||||||||
Number of shares cancelled | 57,076 | ||||||||||||||
Number of shares cancelled,value | $ 4,765,846 | ||||||||||||||
Series H Convertible Preferred Stock [Member] | Patent License Agreement [Member] | RPX Corporation [Member] | |||||||||||||||
Number of shares cancelled | 57,076 | ||||||||||||||
Number of shares cancelled,value | $ 4,765,846,000 | ||||||||||||||
Series H Convertible Preferred Stock [Member] | Second Patent License Agreement [Member] | RPX Corporation [Member] | |||||||||||||||
Number of shares cancelled | 381,967 | ||||||||||||||
Number of shares cancelled,value | $ 31,894,244 | ||||||||||||||
Series H Convertible Preferred Stock [Member] | Second Patent License Agreement [Member] | RPX Corporation [Member] | |||||||||||||||
Number of shares cancelled | 381,967 | ||||||||||||||
Number of shares cancelled,value | $ 31,894,244,000 | ||||||||||||||
Series I Redeemable Convertible Preferred Stock [Member] | |||||||||||||||
Number of preferred stock authorized | 119,760 | 119,760 | |||||||||||||
Preferred stock, par value (in dollars per share) | $ 167 | $ 0.0001 | $ 167 | ||||||||||||
Description of stock conversion terms | Each share of Series I Preferred Stock was convertible into twenty-nineteenths of a share of Common Stock | ||||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ 167 | $ 167 | |||||||||||||
Description of prefered stock voting rights | Holders of the Series I Preferred Stock shall be entitled to vote on all matters submitted to its stockholders and shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series I Preferred Stock were convertible, subject to applicable beneficial ownership limitations. | ||||||||||||||
Preferred stock issued | |||||||||||||||
Preferred stock outstanding | |||||||||||||||
Redemption date | Dec. 31, 2015 | ||||||||||||||
Description of partial redemption terms | (i) such number of shares of Series I Preferred Stock as had a stated value of $5.0 million; or (ii) such number of shares of Series I Preferred Stock as should, together with all voluntary and mandatory redemptions and conversions to Common Stock occurring prior to the applicable Partial Redemption Date, had an aggregate stated value of $5.0 million; or (iii) the remaining shares of Series I Preferred Stock issued and outstanding if such shares had an aggregate stated value of less than $5.0 million, in an amount of cash equal to its stated value plus all accrued but unpaid dividends, distributions and interest thereon, unless such holder of Series I Preferred Stock, in its sole discretion, elected to waive such Redemption Payment or convert such shares of Series I Preferred Stock (or a portion thereof) into Common Stock. | ||||||||||||||
Interest on redemption payment default | 15.00% | 15.00% | |||||||||||||
Description of collateral | Rockstar patent portfolio serves as collateral security. | ||||||||||||||
Description of fundamental transaction | (i) 50% of the net proceeds of the Fundamental Transaction after deduction of the amount of net proceeds required to leave the Company with cash and cash equivalents on hand of $5.0 million and up until the net proceeds leave the Company with cash and cash equivalents on hand of $7.5 million and (ii) 100% of the net proceeds of the Fundamental Transaction thereafter. | ||||||||||||||
Series I Redeemable Convertible Preferred Stock [Member] | RPX Corporation [Member] | |||||||||||||||
Number of sahres redeemed | 5,601 | ||||||||||||||
Value of shares redeemed | $ 900,000 | ||||||||||||||
Series I Redeemable Convertible Preferred Stock [Member] | Rockstar Consortium US LP [Member] | |||||||||||||||
Number of shares issued | 119,760 | ||||||||||||||
Value of shares issued | $ 20,000,000 | ||||||||||||||
Series I Redeemable Convertible Preferred Stock [Member] | Patent License Agreement [Member] | RPX Corporation [Member] | |||||||||||||||
Number of shares cancelled | 29,940 | ||||||||||||||
Number of shares cancelled,value | $ 5,000,000 | ||||||||||||||
Series K Convertible Preferred Stock [Member] | |||||||||||||||
Number of preferred stock authorized | 1,240 | ||||||||||||||
Preferred stock, par value (in dollars per share) | $ 1,000 | $ 0.0001 | |||||||||||||
Description of stock conversion terms | Each share of Series K Preferred Stock is convertible into five thousand-nineteenths of a share of Common Stock. | ||||||||||||||
Description of prefered stock voting rights | The Series K Preferred does not generally have any voting rights but are convertible into shares of Common Stock. | ||||||||||||||
Number of preferred stock converted | 326,315 | ||||||||||||||
Preferred stock issued | 1,240 | 1,240 | |||||||||||||
Preferred stock outstanding | 1,240 | 1,240 | |||||||||||||
Series K Convertible Preferred Stock [Member] | December 2015 Offering [Member] | |||||||||||||||
Number of shares issued | 1,240 |
Stockholders' Equity and Rede55
Stockholders' Equity and Redeemable Convertible Preferred Stock (Details Narrative 2) - USD ($) $ / shares in Units, $ in Thousands | Nov. 14, 2016 | Jun. 22, 2016 | May 20, 2016 | Feb. 26, 2016 | Feb. 04, 2016 | Jan. 26, 2016 | Dec. 21, 2015 | Oct. 06, 2015 | Aug. 09, 2015 | Aug. 06, 2015 | Jul. 10, 2015 | Jun. 15, 2015 | Jun. 10, 2015 | May 24, 2015 | Apr. 03, 2015 | Jan. 26, 2015 | Apr. 03, 2014 | Jan. 06, 2014 | Dec. 31, 2015 | Nov. 30, 2015 | Aug. 31, 2015 | Jun. 15, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2012 |
Allocated stock based compensation | $ 35 | $ 200 | |||||||||||||||||||||||
Issuance common stock for 2016 annual bonus (in shares) | 122,972 | ||||||||||||||||||||||||
Common Stock [Member] | |||||||||||||||||||||||||
Number of shares issued | 1,592,357 | ||||||||||||||||||||||||
Anthony Hayes [Member] | Employment Agreement [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 118,512 | ||||||||||||||||||||||||
Third Party [Member] | Consulting Agreement [Member] | |||||||||||||||||||||||||
Description of vesting terms | The first $25,000 should be issued at the closing price of December 22, 2015, and the second $25,000 will be issued six months later. | ||||||||||||||||||||||||
Cash retainer payments | $ 70 | ||||||||||||||||||||||||
Consultant fees | $ 50 | ||||||||||||||||||||||||
Service expenses | 25 | ||||||||||||||||||||||||
Consulting Agreement [Member] | |||||||||||||||||||||||||
Number of shares issued | 789 | 1,578 | |||||||||||||||||||||||
Allocated stock based compensation | 28 | ||||||||||||||||||||||||
Consultant fees | $ 10 | $ 5 | |||||||||||||||||||||||
Consulting Agreement [Member] | Howard E. Goldberg [Member] | |||||||||||||||||||||||||
Service expenses | $ 20,400 | ||||||||||||||||||||||||
Service expenses paid in shares | $ 1,487 | ||||||||||||||||||||||||
Consulting Agreement [Member] | Common Stock [Member] | |||||||||||||||||||||||||
Number of shares issued | 2,193 | 1,350 | 822 | ||||||||||||||||||||||
Mr. Frank Reiner [Member] | Employment Agreement [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 60,000 | ||||||||||||||||||||||||
Value of shares issued for services | $ 5 | ||||||||||||||||||||||||
Mr. Darrell Dotson [Member] | Employment Agreement [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 91,255 | ||||||||||||||||||||||||
Restricted Stock [Member] | Consulting Agreement [Member] | |||||||||||||||||||||||||
Number of shares issued for services | 42,106 | ||||||||||||||||||||||||
Restricted Stock [Member] | Third Party [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 652 | ||||||||||||||||||||||||
Non-option grant date fair value | $ 1,487 | ||||||||||||||||||||||||
Restricted Stock [Member] | Third Party [Member] | Consulting Agreement [Member] | |||||||||||||||||||||||||
Number of shares issued | 42,445 | ||||||||||||||||||||||||
Cash retainer payments | $ 100 | ||||||||||||||||||||||||
Number of non-option shares granted | 8,771 | ||||||||||||||||||||||||
Restricted Stock [Member] | Consultant One [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 10,870 | 7,895 | |||||||||||||||||||||||
Non-option grant date fair value | $ 25 | $ 15 | |||||||||||||||||||||||
Restricted Stock [Member] | Consultant Two [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 43,479 | 7,895 | |||||||||||||||||||||||
Non-option grant date fair value | $ 100 | $ 15 | |||||||||||||||||||||||
Restricted Stock [Member] | Consulting Agreement [Member] | |||||||||||||||||||||||||
Number of non-option shares granted | 2,368 | ||||||||||||||||||||||||
Restricted Stock [Member] | Consulting Agreement [Member] | Howard E. Goldberg [Member] | |||||||||||||||||||||||||
Number of shares issued | 652 | ||||||||||||||||||||||||
Restricted Stock [Member] | Mr. Frank Reiner [Member] | Consulting Agreement [Member] | |||||||||||||||||||||||||
Value of shares issued for services | 60 | ||||||||||||||||||||||||
Restricted Stock [Member] | Mr. Darrell Dotson [Member] | Consulting Agreement [Member] | |||||||||||||||||||||||||
Value of shares issued for services | $ 60 | ||||||||||||||||||||||||
Restricted Stock Units [Member] | |||||||||||||||||||||||||
Unrecognized stock-based compensation expense | $ 5,000 | ||||||||||||||||||||||||
Restricted Stock Units [Member] | Mr. Hayes [Member] | |||||||||||||||||||||||||
Description of vesting terms | One-half (1/2) of the RSU grant shall vest if as of December 31, 2016 the Company has pro-forma cash of at least five million dollars ($5,000,000) (cash plus any cash used for a Board-approved extraordinary acquisition or transaction reconstituting the Company’s core operations, less accrued bonuses) and one-half (1/2) shall vest if there is consummation by December 31, 2016 of a Board-approved extraordinary acquisition or transaction reconstituting the Company’s core operations. In addition, the RSU grant shall immediately vest in full if by December 31, 2016 there is (i) a “Change in Control Transaction” during the term of the Mr. Hayes’ employment and or (ii) a termination of his services hereunder by the Company other than for “Cause” or by Mr. Hayes for “Good Reason”. | ||||||||||||||||||||||||
Number of non-option shares granted | 118,512 | ||||||||||||||||||||||||
Maximum [Member] | |||||||||||||||||||||||||
Vesting term | 5 years | ||||||||||||||||||||||||
2012 Equity Incentive Plan [Member] | |||||||||||||||||||||||||
Vested options outstanding | 282 | ||||||||||||||||||||||||
Number of shares available for grant | 239 | ||||||||||||||||||||||||
2013 Equity Incentive Plan [Member] | Maximum [Member] | |||||||||||||||||||||||||
Vested options outstanding | 105,610 | ||||||||||||||||||||||||
Number of shares available for grant | 41,758 | ||||||||||||||||||||||||
Number of shares issued | 147,368 | ||||||||||||||||||||||||
2014 Equity Incentive Plan [Member] | |||||||||||||||||||||||||
Number of shares available for grant | 227,118 | ||||||||||||||||||||||||
Amendment to increase number of shares issuable of common stock | 219,046 shares of Common Stock to 434,210 shares of Common Stock. | ||||||||||||||||||||||||
Options outstanding | 207,092 | ||||||||||||||||||||||||
Number of options granted | 78 | 176 | |||||||||||||||||||||||
Expiration date | Nov. 15, 2011 | May 25, 2010 | |||||||||||||||||||||||
2014 Equity Incentive Plan [Member] | Five Directors [Member] | |||||||||||||||||||||||||
Fair value of stock options granted | $ 36 | $ 69 | |||||||||||||||||||||||
Number of options granted | 23,682 | 23,682 | |||||||||||||||||||||||
Vesting term | 1 year | ||||||||||||||||||||||||
Dividend yield | 0.00% | ||||||||||||||||||||||||
2014 Equity Incentive Plan [Member] | Non-Qualified Stock Option [Member] | Anthony Hayes [Member] | |||||||||||||||||||||||||
Number of options granted | 26,315 | ||||||||||||||||||||||||
Term of options | P5Y | ||||||||||||||||||||||||
Exercise price (in dollars per share) | $ 54.34 | ||||||||||||||||||||||||
Description of vesting terms | 50% of the options vested immediately, and the remaining 50% vesting upon the Company’s receipt of gross proceeds of at least $30 million by April 3, 2015 from an offering of its securities (the “Performance Condition”). | ||||||||||||||||||||||||
Proceeds from stock options exercised | $ 30,000 | ||||||||||||||||||||||||
Number of options forfeited | 13,157 | ||||||||||||||||||||||||
Reverse option expenses | $ 400 |
Related Party Transactionss (De
Related Party Transactionss (Details Narrative) - USD ($) | May 20, 2016 | Aug. 10, 2015 | Jan. 06, 2014 | Jan. 31, 2016 | Jun. 30, 2015 | Feb. 28, 2015 | Apr. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Consulting expenses | $ 2,293,000 | $ 2,780,000 | ||||||||
Employment Agreement [Member] | Anthony Hayes [Member] | ||||||||||
Annual base salary | $ 350,000 | |||||||||
Number of non-option shares granted | 118,512 | |||||||||
Description of vest | One-half of the grant shall vest if as of December 31, 2016, the Corporation has pro-forma cash of at least five million dollars ($5,000,000) (cash plus any cash used for a Board-approved extraordinary acquisition or transaction reconstituting the Company’s core operations, less accrued bonuses) and one-half shall vest upon the achievement of certain agreed milestones. As of December 31, 2016, 59,256 restricted stock units were vested and 59,256 restricted stock units were forfeited. | |||||||||
Employment Agreement [Member] | Chief Financial Officer [Member] | ||||||||||
Annual base salary | $ 80,000 | $ 235,000 | $ 20,000 | 40,000 | $ 20,000 | |||||
Increase in annual base salary | 271,000 | |||||||||
Number of non-option shares granted | 60,000 | |||||||||
Monthly fee to officer | $ 20,000 | |||||||||
Common stock shares issued for services | $ 5,000 | |||||||||
Amount of compensation | 60,000 | 20,000 | ||||||||
Employment Agreement [Member] | Chord Advisors, LLC (Chord) [Member] | ||||||||||
Value of shares forgiven | $ 15,000 | |||||||||
Employment Agreement [Member] | Richard Cohen [Member] | ||||||||||
Monthly fee to officer | $ 10,000 | |||||||||
New Employment Agreement [Member] | Anthony Hayes [Member] | ||||||||||
Annual base salary | $ 350,000 | $ 175,000 | ||||||||
Percentage of target bonus | 100.00% | |||||||||
Consulting Agreement [Member] | Mr. Howard E. Goldberg [Member] | ||||||||||
Monthly fee to officer | $ 20,400 | |||||||||
Consulting expenses | $ 80,800 | $ 42,287 |
Commitments and Contingencies57
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Year Ended December 31, 2017 | $ 220 |
Year Ended December 31, 2018 | 45 |
Total | $ 265 |
Commitments and Contingencies58
Commitments and Contingencies (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Financed to director and officer for insurance | $ 200 |
Term of policy | 12 months |
Accrued expenses | $ 100 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Federal | ||
Current | ||
Deferred | 3,578 | 16,374 |
Increase in valuation allowance | 3,578 | (16,374) |
State and Local | ||
Current | ||
Deferred | (50) | 837 |
Increase in valuation allowance | 50 | (837) |
Change in valuation allowance | (3,578) | (17,211) |
Income tax provision (benefit) |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
U.S. Statutory Federal Rate | 34.00% | 34.00% |
State Taxes, Net of Federal Tax Benefit | 2.97% | 2.52% |
Other Permanent Differences | 1.01% | 0.01% |
State rate change effect | 6.88% | (0.75%) |
Fair Value of Warrants | 11.85% | 0.00% |
Increase due to change in NOL and other true ups | (1.47%) | (2.35%) |
Change in Valuation Allowance | (55.25%) | (33.43%) |
Income Taxes Provision (Benefit) | 0.00% | 0.00% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets | ||
Net-operating loss carryforward | $ 12,971 | $ 10,290 |
Stock based compensation | 8,413 | 8,101 |
Patent portfolio and other | 17,796 | 17,211 |
Total Deferred Tax Assets | 39,180 | 35,602 |
Valuation allowance | (39,180) | (35,602) |
Deferred Tax Asset, Net of Allowance |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Change in valuation allowance | $ (3,578) | $ (17,211) |
Net operating loss carryovers | $ 37,500 | |
Net operating loss carryovers expire | 2029 through 2036 | |
Previously unidentified loss benefits | $ 3,000 |