Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 13, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'Kitara Media Corp. | ' |
Entity Central Index Key | '0001350773 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 95,884,241 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash | $1,768 | $2,478 |
Accounts receivable, net of allowance for doubtful accounts of $343 and $343, respectively | 5,001 | 10,061 |
Prepaid expenses and other current assets | 220 | 268 |
Total current assets | 6,989 | 12,807 |
Property and equipment, net | 1,304 | 910 |
Restricted cash | 136 | 183 |
Deferred financing costs | 55 | 74 |
Intangible assets | 1,957 | 2,126 |
Goodwill | 11,816 | 11,816 |
Total assets | 22,257 | 27,916 |
Current liabilities | ' | ' |
Accounts payable and accrued liabilities | 2,206 | 4,629 |
Accrued compensation | 285 | 1,180 |
Short term debt | 1,876 | 3,304 |
Note payable stockholder, current | 100 | ' |
Total current liabilities | 4,467 | 9,113 |
Commitments and contingencies | ' | ' |
Deferred rent | ' | 9 |
Deferred tax liability | 272 | 272 |
Other liabilities | 224 | 224 |
Note payable stockholder, non-current | 200 | 302 |
Total liabilities | 5,163 | 9,920 |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred Stock, $0.0001 par value, authorized 1,000,000 shares, none issued | ' | ' |
Common stock, $0.0001 par value, authorized 300,000,000 shares, issued and outstanding 95,884,241 and 83,156,969, at September 30, 2014 and December 31, 2013, respectively | 10 | 8 |
Additional paid-in capital | 24,690 | 17,820 |
Retained earnings (accumulated deficit) | -7,606 | 168 |
Total stockholders' equity | 17,094 | 17,996 |
Total liabilities and stockholders' equity | $22,257 | $27,916 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Balance Sheets [Abstract] | ' | ' |
Allowance for doubtful accounts receivable | $343 | $343 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ' | ' |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 95,884,241 | 83,156,969 |
Common stock, shares outstanding | 95,884,241 | 83,156,969 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statements of Operations [Abstract] | ' | ' | ' | ' |
Revenue | $4,333 | $6,586 | $16,508 | $17,013 |
Cost of revenue | 3,005 | 4,339 | 13,064 | 11,720 |
Gross profit | 1,328 | 2,247 | 3,444 | 5,293 |
Operating expenses | ' | ' | ' | ' |
Employee expenses | 1,863 | 1,132 | 6,553 | 3,149 |
Related party expenses | ' | 96 | ' | 250 |
Other operating expenses | 1,085 | 717 | 4,090 | 1,235 |
Depreciation and amortization | 121 | 127 | 346 | 364 |
Total operating expenses | 3,069 | 2,072 | 10,989 | 4,998 |
Operating (loss) income | -1,741 | 175 | -7,545 | 295 |
Interest expense | -47 | ' | -203 | ' |
(Loss) income before income taxes | -1,788 | 175 | -7,748 | 295 |
Income taxes | -10 | ' | -26 | ' |
Net (loss) income | ($1,798) | $175 | ($7,774) | $295 |
Net (loss) income per common share - basic | ($0.02) | ' | ($0.09) | $0.01 |
Net (loss) income per common share - diluted | ($0.02) | ' | ($0.09) | $0.01 |
Weighted-average number of shares outstanding - basic | 95,884,241 | 59,011,675 | 90,383,076 | 33,146,792 |
Weighted-average number of shares outstanding - diluted | 95,884,241 | 59,798,904 | 90,383,076 | 33,409,201 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statement of Stockholders' Equity (USD $) | Total | Common stock | Additional Paid in Capital | Retained Earnings (Accumulated Deficit) |
In Thousands, except Share data | ||||
Beginning Balance at Dec. 31, 2013 | $17,996 | $8 | $17,820 | $168 |
Beginning Balance, shares at Dec. 31, 2013 | ' | 83,156,969 | ' | ' |
Stock-based compensation - amortization of stock options | 381 | ' | 381 | ' |
Private placement of common stock and warrants on April 25, 2014, including the cancellation of the $1,000 promissory note held by Ironbound | 6,491 | 2 | 6,489 | ' |
Private placement of common stock and warrants on April 25, 2014, including the cancellation of the $1,000 promissory note held by Ironbound, (shares) | ' | 12,727,272 | ' | ' |
Net income (loss) | -7,774 | ' | ' | -7,774 |
Ending Balance at Sep. 30, 2014 | $17,094 | $10 | $24,690 | ($7,606) |
Ending Balance, shares at Sep. 30, 2014 | ' | 95,884,241 | ' | ' |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Statement of Stockholders' Equity [Abstract] | ' |
Cancellation of promissory note held by Ironbound | $1,000 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net (loss) income | ($7,774) | $295 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities | ' | ' |
Depreciation and amortization | 346 | 364 |
Stock-based compensation | 381 | 34 |
Deferred rent amortization | -9 | -9 |
Financing cost amortization | 19 | ' |
Provisions for bad debt | ' | 81 |
Loss on disposal of property and equipment | ' | 58 |
Changes in Assets and Liabilities | ' | ' |
Accounts receivable | 5,060 | 1,828 |
Prepaid expenses and other current assets | 48 | -54 |
Accounts payable and accrued liabilities | -2,425 | -1,228 |
Accrued compensation | -895 | ' |
Due to related party | ' | -176 |
Net cash (used in) provided by operating activities | -5,249 | 1,193 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Purchase of property and equipment | -571 | -466 |
Refund of security deposits | 47 | ' |
Net cash used in investing activities | -524 | -466 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Capital distributions to members | ' | -699 |
Repayments under lines of credit | -12,948 | ' |
Borrowings under lines of credit | 13,735 | ' |
Proceeds from note payable - shareholder | 1,000 | ' |
Repayments of term loans | -2,215 | ' |
Proceeds from private placement, net | 5,491 | 1,700 |
Cash acquired in acquisition | ' | 8 |
Repurchase of stock | ' | -50 |
Changes in cash overdraft from financial institution, net | ' | -670 |
Net cash provided by financing activities | 5,063 | 289 |
Net (decrease) increase in cash | -710 | 1,016 |
Cash at beginning of period | 2,478 | ' |
Cash at end of period | 1,768 | 1,016 |
Supplemental disclosure to cash flow information: | ' | ' |
Cash paid for interest | 111 | ' |
Cash paid for taxes | 118 | ' |
Supplemental disclosure of non-cash financing activities: | ' | ' |
Shares of common stock issued in exchange for note payable - stockholder | 1,000 | ' |
Net assets acquired in connection with the acquisition of New York Publishing Group including the acquisition of $2,662 in short term debt (see Note 7) | ' | 2,000 |
Accrued working capital adjustment related to the Kitara reverse acquisition | ' | 904 |
Conversion of promissory notes to equity | ' | $300 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Cash Flows (Parenthetical) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Statement of Cash Flows [Abstract] | ' |
Proceeds from short-term debt | $2,662 |
Organization_and_Description_o
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2014 | |
Organization and Description of Business [Abstract] | ' |
Organization and Description of Business | ' |
1. Organization and Description of Business | |
Kitara Media Corp. (the “Company”) operates through its wholly owned subsidiaries, Kitara Media, LLC, a Delaware limited liability company (“Kitara Media”), Health Guru Media, Inc., a Delaware corporation (“Health Guru Media”), and New York Publishing Group, Inc., a Delaware corporation (“NYPG”). Kitara Media is an online video solutions provider that seeks to increase revenue to website publishers. Health Guru Media is the operator of Healthguru.com, an online health video resource site. NYPG is a publisher of Adotas.com, a website and daily email newsletter. | |
The Company was formed on December 5, 2005 as a Delaware corporation. From the Company’s inception in 2005 until February 29, 2012, when it completed a reverse merger transaction with Andover Games, LLC (“Andover Games”), the Company was a blank check company and did not engage in active business operations other than its search for, and evaluation of, potential business opportunities. On February 29, 2012, the Company completed a reverse merger of Andover Games pursuant to a Merger Agreement and Plan of Reorganization with a wholly owned subsidiary of the Company, Andover Games and the former members of Andover Games, whereby Andover Games became the Company’s wholly-owned direct subsidiary. | |
On June 12, 2013, the Company entered into a Merger Agreement and Plan of Reorganization (“K/N Merger Agreement”) with Ascend Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary (“K/N Merger Sub LLC”), Ascend Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary (“K/N Merger Sub Inc.”), Kitara Media, NYPG, and those security holders of Kitara Media and NYPG executing the “Signing Holder Signature Page” thereto, which security holders held all of the outstanding membership interests of Kitara Media (“Selling Source” or the “Kitara Signing Holder”) and all of the outstanding shares of common stock of NYPG (the “NYPG Signing Holder” and together with the Kitara Signing Holder, the “Signing Holders”). The K/N Merger Agreement contemplated the (i) merger of K/N Merger Sub LLC with and into Kitara Media with Kitara Media surviving the merger and (ii) merger of K/N Merger Sub Inc. with and into NYPG with NYPG surviving the merger (collectively, the “Mergers”). | |
On July 1, 2013, the Company consummated the transactions contemplated by the K/N Merger Agreement. At the close of the Mergers, (i) the Kitara Signing Holder received an aggregate of 20,000,000 shares of the Company’s common stock and (ii) the NYPG Signing Holder received (a) an aggregate of 10,000,000 shares of the Company’s common stock and (b) two promissory notes (collectively, the “Closing Notes”), one in the amount of $100 being due and payable on January 1, 2014, which was subsequently refinanced and is now due and payable on January 1, 2015, and one in the amount of $200 being due and payable on January 1, 2023 to replace the existing advances from the NYPG Signing Holder to NYPG. Each of the Closing Notes accrues interest at a rate of 1% per annum, which will be due at the time the Closing Notes become due and payable. The terms of the K/N Merger Agreement provided for an adjustment to the merger consideration between the Company and Kitara Media dependent on a calculation of Kitara Media’s Closing Working Capital, as defined in the K/N Merger Agreement. The amount of this adjustment was determined to be $904 (See Note 7). Also on July 1, 2013, as a condition to closing the K/N Merger Agreement, (1) certain stockholders of the Company contributed an aggregate of 25,813,075 shares of common stock to the Company for cancellation without the payment of any additional consideration and (2) the Company sold an aggregate of 4,000,000 shares of the Company Common Stock to Ironbound Partners Fund LLC (“Ironbound”), an affiliate of Jonathan Ledecky the Company’s then Interim Chief Financial Officer and current non-executive Chairman of the Board, on a private placement basis, for an aggregate purchase price of $2,000 or $0.50 per share, of which $300 was through the conversion of outstanding promissory notes held by Ironbound. In addition, the Company repurchased 381,950 shares from a stockholder simultaneously with the closing of the Mergers. Prior to June 30, 2013, the operations of Andover Games were formally discontinued. On July 1, 2013, the financial statements of Kitara Media became the Company’s financial statements and the Company’s operations became entirely that of Kitara Media and NYPG. | |
For accounting purposes, the acquisition of Kitara Media was treated as an acquisition of the Company by Kitara Media and as a recapitalization of Kitara Media as the member of Kitara Media held a large percent of the Company’s shares and exercises significant influence over the operating and financial policies of the consolidated entity and the Company was a non-operating public registrant prior to the transaction. Pursuant to Accounting Standards Codification (“ASC”) 805-10-11 through 55-15, the merger or acquisition of a private operating company into a non-operating public registrant with nominal assets is considered a capital transaction in substance rather than a business combination. As a result, the condensed consolidated balance sheets, statements of operations, and statements of cash flows of Kitara Media have been retroactively updated to reflect the recapitalization. | |
The historical condensed consolidated financial statements of Kitara Media are now reflected as those of the Company. For accounting purposes, the acquisition of NYPG by the Company was treated as a business combination. | |
On August 19, 2013, the Company filed with the Secretary of State of the State of Delaware an amendment to its certificate of incorporation to change the Company’s name from “Ascend Acquisition Corp.” to “Kitara Media Corp.” to better reflect the Company’s operations following the Mergers. | |
On December 3, 2013, the Company acquired Health Guru Media. As a result of the transaction, Health Guru Media security holders received an aggregate of 18,000,000 shares of the Company’s common stock. As part of the transaction, the Company raised $2,000 from qualified investors in a private offering priced at $0.50 per share, including from Ironbound and another member of the Company’s board of directors. For accounting purposes, the acquisition of Health Guru Media by the Company was treated as a business combination. | |
On April 25, 2014, the Company entered into a Securities Purchase Agreement (“Purchase Agreement”) providing for the sale on a private placement basis (the “Offering”) of shares of the Company’s common stock at $0.55 per share and the issuance of warrants to purchase 50% of the total number of shares purchased by the investors in the Offering. Pursuant to the Purchase Agreement, the Company sold a total of $7,000 of its shares of common stock (or an aggregate of 12,727,272 shares) in the Offering to several accredited investors (the “Investors”), including Ironbound and Robert Regular, the Company’s chief executive officer. In connection with the Offering, the Company issued warrants to purchase an aggregate of 6,363,636 shares of the Company’s common stock. The warrants are exercisable at a price of $0.825 per share and expire on April 30, 2019. | |
The Company consummated the sale of these securities on April 29, 2014. The Company received proceeds from the Offering of approximately $6,500, including the cancellation of a $1,000 promissory note held by Ironbound that was used to make its purchase in the Offering, net of approximately $500 of commissions and expenses. | |
In addition, pursuant to the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors. Pursuant to the Registration Rights Agreement, the Company registered the shares sold pursuant to the Purchase Agreement, including the shares underlying the warrants sold pursuant thereto, for resale by the Investors pursuant to a registration statement which was declared effective by the Securities and Exchange Commission (“SEC”) on June 4, 2014. The Registration Rights Agreement provides for liquidated damages upon the occurrence of certain events, including failure by the Company to maintain the effectiveness of the registration statement for certain periods of time. The amount of the liquidated damages is 1.0% of the aggregate subscription amount paid by an Investor for the shares affected by the event that are still held by the Investor upon the occurrence of the event, and monthly thereafter, up to a maximum of 10.0%. | |
At the closing of the Offering, each of Jonathan J. Ledecky, Robert Regular and Joshua Silberstein, the Company’s president, entered into a lock-up agreement (a “Lock-Up Agreement”) with the Company, pursuant to which each such person agreed not to sell or otherwise dispose of, or enter into any arrangement that transfers the economic consequences of ownership of, any shares of Company common stock until January 29, 2015, subject to certain exceptions. | |
On May 8, 2014, the Board approved to grant Ironbound an option to purchase an aggregate of 750,000 shares of the Corporation’s common stock, immediately exercisable at $0.60 per share (the closing stock price on the date of grant) for a period of five years (see Note 5). | |
On October 10, 2014, the Company, entered into (i) a Unit Exchange Agreement (the “ Exchange Agreement ”) with Kitara Holdco Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“ Holdco ”), Future Ads LLC, a California limited liability company (“ Future Ads ”), and the members of Future Ads (the “ Transferors ”), and (ii) an Agreement and Plan of Reorganization (the “ Reorganization Agreement ”), with Holdco, and Kitara Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Holdco (“ Merger Sub ”). | |
Following the consummation of the transactions contemplated by the Exchange Agreement and Reorganization Agreement (the “ Transactions ”), (i) Holdco will become a new publicly traded company, (ii) the Company and Future Ads will become wholly-owned subsidiaries of Holdco and (iii) the former members of Future Ads will own approximately 53% of the fully-diluted stock of Holdco. | |
The Transactions will be financed by funds managed or advised by Highbridge Principal Strategies, LLC (such funds, collectively, “ Highbridge ”), which have committed to provide up to $96,000 in debt financing to Holdco and certain of its subsidiaries (including the Company and Future Ads), subject to definitive documentation and closing conditions, as described in more detail below. See Note 8 - Subsequent Events for further discussion of the Transactions. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||||||
2. Summary of Significant Accounting Policies | |||||||||||||||||
Basis of Presentation | |||||||||||||||||
The accompanying unaudited interim condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the SEC regarding unaudited interim financial information. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s Condensed Consolidated Balance Sheets, Statements of Operations, and Cash Flows for the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full year due to seasonal and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with US GAAP have been omitted in accordance with the rules and regulations of the SEC. Accordingly, these unaudited interim condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2014. | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in the accompanying unaudited interim condensed consolidated financial statements. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The Company’s unaudited interim condensed consolidated financial statements are prepared in conformity with US GAAP, which requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. The Company’s most significant estimates relate to the accounts receivable allowance, the valuation allowance on deferred tax assets, the valuation of stock options, the valuation of contingent consideration from historical business combinations, and the value of intangible assets and goodwill. | |||||||||||||||||
Concentration of Credit Risk and Significant Customers | |||||||||||||||||
The Company’s concentration of credit risk includes its concentrations from key customers and vendors. The details of these significant customers and vendors are presented in the following table for the three and nine months ended September 30, 2014 and 2013; | |||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
The Company’s largest customers are presented below as a percentage of the Company’s aggregate: | |||||||||||||||||
Revenue | 20.9% and 14.8% of revenue, or 35.7% of revenue in the aggregate | 26.5%, 22.7% and 19.2% of revenue, or 68.4% of revenue in the aggregate | 18.7%, 10.7% and 10.1% of revenue, or 39.5% of revenue in the aggregate | 26.0% and 15.8% of revenue, or 41.8% of revenue in the aggregate | |||||||||||||
Accounts receivable | 16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | 30.5%, 21.9% and 19.0% of accounts receivable, or 71.4% of accounts receivable in the aggregate | 16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | 30.5% and 19.0% of accounts receivable, or 49.5% of accounts receivable in the aggregate | |||||||||||||
The Company’s largest vendors are presented below as a percentage of the Company’s aggregate: | |||||||||||||||||
Cost of revenues | 30.4%, 24.6% and 19.1% of cost of revenues, or 74.1% of cost of revenues in the aggregate | 50.1% of cost of revenues from one vendor | 23.2%, 19.1%, 18.3% and 12.7% of cost of revenues, or 73.3% of cost of revenues in the aggregate | 31.6%, 12.5% of cost of revenues, or 44.1% of cost of revenues in the aggregate | |||||||||||||
Accounts payable | 32.8% and 14.7% of accounts payable, or 47.5% of accounts payable in the aggregate | 39.7% of accounts payable from one vendor | 32.8% and 14.7% of accounts payable, or 47.5% related to accounts payable in the aggregate | 39.7% accounts payable from one vendor | |||||||||||||
Kitara Media operates in a free market bid-based environment. Customer concentration is a reflection of obtaining the highest bid. | |||||||||||||||||
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and accounts receivable. Cash is deposited with a limited number of financial institutions. The balances held at any one financial institution may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. Accounts are insured by the FDIC up to $250. As of September 30, 2014 and December 31, 2013, the Company held cash balances in excess of federally insured limits. | |||||||||||||||||
Concentration of Credit Risk and Significant Customers, continued | |||||||||||||||||
Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for doubtful accounts and sales credits. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
ASC Topic 825 “Financial Instruments” requires that fair value be disclosed for the Company’s financial instruments. The Company’s financial instruments, including cash, accounts receivable, accounts payable, short term debt, note payables and accrued liabilities are carried at historical cost basis. At September 30, 2014 and December 31, 2013, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. The contingent consideration related to a previous acquisition is measured at fair value on a recurring basis and adjusted accordingly. | |||||||||||||||||
Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: | |||||||||||||||||
● | Level 1: Quoted prices in active markets for identical assets or liabilities. | ||||||||||||||||
● | Level 2: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. | ||||||||||||||||
● | Level 3: Significant unobservable inputs that cannot be corroborated by market data. | ||||||||||||||||
Level 3 financial liabilities measured at fair value on a recurring basis consist of the contingent obligation to Skyword, the entity that sold Gather.com to Health Guru Media prior to the Company’s acquisition of Health Guru Media, for which there is no current market such that the determination of fair value requires significant judgment or estimation. Future payments are contingent on revenue levels and as a result, the liability is remeasured at fair value on a recurring basis. 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. | |||||||||||||||||
The contingent consideration for the purchase of Gather.com consists of a five year arrangement to pay royalties to Skyword (“Skyword Royalty”). The Skyword Royalty is to be paid in quarterly installments and is based on revenues generated by the assets purchased. The Skyword Royalty is paid pursuant to the table below. | |||||||||||||||||
Skyword Royalty Payment Schedule | Royalty Rate | ||||||||||||||||
Applied to | |||||||||||||||||
Revenues for | |||||||||||||||||
Stated Period | |||||||||||||||||
09/01/13 to 02/28/14 | 5 | % | |||||||||||||||
03/01/14 to 8/31/14 | 15 | % | |||||||||||||||
09/01/14 to 02/28/15 | 20 | % | |||||||||||||||
03/01/15 to 09/15/17 | 25 | % | |||||||||||||||
The royalty amount is capped and cannot exceed $2,000. At the end of the fifth year, there is a settlement provision. An amount representing $2,000 less the aggregate amount of the Skyword Royalty paid through such fifth year is deemed the “Remainder.” If (i) the Remainder is $0, then no further action is necessary, (ii) if the Remainder is greater than $0, then Health Guru Media may pay the full dollar value of the Remainder to Skyword in full satisfaction of the obligation, or, (iii) if Health Guru Media does not exercise its option to pay the remainder in full, then Health Guru Media shall select a dollar value between $0 and the Remainder (“Settlement Value”). Skyword then has the option to accept receipt of the Settlement Value in full satisfaction or (iv) Skyword pays Health Guru Media the Settlement Value and thus reclaims all assets of the Gather business. | |||||||||||||||||
Fair Value of Financial Instruments, continued | |||||||||||||||||
The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the assets that are measured at fair value on a recurring basis. | |||||||||||||||||
Condensed Consolidated | Quoted Prices in Active Markets for Identical Assets or Liabilities | Quoted Prices for Similar Assets or Liabilities in Active Markets | Significant | ||||||||||||||
Balance Sheet | (Level 1) | (Level 2) | Unobservable | ||||||||||||||
Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | |||||||||||||||||
30-Sep-14 | $ | 224 | $ | - | $ | - | $ | 224 | |||||||||
31-Dec-13 | $ | 224 | $ | - | $ | - | $ | 224 | |||||||||
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 Nine Months Ended September 30, 2014 | |||||||||||||||||
Beginning balance at January 1, 2014 | $ | 224 | |||||||||||||||
Change in fair value of contingent consideration | - | ||||||||||||||||
Ending balance at September 30, 2014 | $ | 224 | |||||||||||||||
The contingent obligation to Skyword at September 30, 2014, recorded in connection with Health Guru Media’s purchase of Gather.com in September 2012, is classified within Level 3 of the valuation hierarchy. In order to determine the fair value of the contingent obligation to Skyword, using historical performance, the Company estimates the future cash flows from the Gather.com website and then applies a discount rate of 35%. This valuation is completed quarterly and the contingent obligation is adjusted accordingly. | |||||||||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s Chief Financial Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Interim Chief Financial Officer. | |||||||||||||||||
Income Taxes | |||||||||||||||||
In its interim financial statements, the Company follows the guidance in ASC 270, “Interim Reporting” and ASC 740 “Income Taxes”, whereby the Company utilizes the expected annual effective tax rate in determining its income tax provisions for the interim periods. That rate differs from U.S. statutory rates primarily as a result of the valuation allowance recorded on net operating loss carryforwards and permanent differences between book and tax reporting. | |||||||||||||||||
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement, and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction. | |||||||||||||||||
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liabilities. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. | |||||||||||||||||
The Company accounts for uncertain tax positions in accordance with ASC 740—“Income Taxes”. No uncertain tax provisions have been identified. The Company accrues interest and penalties, if incurred, on unrecognized tax benefits as components of the income tax provision in the accompanying unaudited interim condensed consolidated statements of operations. | |||||||||||||||||
In accordance with ASC 740, the Company evaluates whether a valuation allowance should be established against the net deferred tax assets based upon the consideration of all available evidence and using a “more likely than not” standard. Significant weight is given to evidence that can be objectively verified. The determination to record a valuation allowance is based on the recent history of cumulative losses and current operating performance. In conducting the analysis, the Company utilizes an approach, which considers the current year loss, including an assessment of the degree to which any losses are driven by items that are unusual in nature and incurred to improve future profitability. In addition, the Company reviews changes in near-term market conditions and any other factors arising during the period, which may impact its future operating results. | |||||||||||||||||
Net earnings per share | |||||||||||||||||
Basic net earnings per common share is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon the exercise of stock options and a warrant. The computation of diluted earnings per share excludes those with an exercise price in excess of the average market price of the Company’s common shares during the periods presented. | |||||||||||||||||
The computation of diluted earnings per share excludes outstanding options in periods where the exercise of such options and warrants would be anti-dilutive. For the three and nine months ended September 30, 2014, there were 8,870,000 options and warrants for the purchase of 6,363,636 shares, excluded from the computation of earnings per share because they were anti-dilutive. For the three and nine months ended September 30, 2013 there were 2,425,000 options excluded from the computation of earnings per share because they were anti-dilutive. | |||||||||||||||||
Net earnings per share, continued | |||||||||||||||||
The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share for the three and nine months ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Weighted average number of shares outstanding, basic | 95,884,241 | 59,011,675 | 90,383,076 | 33,146,792 | |||||||||||||
Effect of dilutive securities, common share equivalents | - | 787,229 | - | 262,409 | |||||||||||||
Weighted average number of shares outstanding, diluted | 95,884,241 | 59,798,904 | 90,383,076 | 33,409,201 | |||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
The FASB has issued ASU No. 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. This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, U.S. GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. This amendment is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations. | |||||||||||||||||
The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“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. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations. | |||||||||||||||||
The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations. | |||||||||||||||||
Accounting standards that have been issued or proposed by the FASB, SEC and/or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. | |||||||||||||||||
Liquidity and Going Concern | |||||||||||||||||
The Company will need to raise additional capital through loans or additional investments from its shareholders, officers, directors, or third parties in order to meet its cash requirements for the next twelve months. None of the shareholders, officers or directors is under any obligation to advance funds to, or to invest in, the Company. Accordingly, on a standalone basis, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. | |||||||||||||||||
The Company has entered into an Exchange agreement with Future Ads, which it is seeking to close prior to the end of 2014 (as described further in Note 8 – Subsequent Events). The Company anticipates that the post-merger combined Company would have sufficient liquidity to fund operations. The closing of the merger, however, is dependent on financing provided by Highbridge. The merger financing provided by Highbridge, is subject to certain pre closing conditions. Accordingly, the Company cannot provide any assurance that the merger with Future Ads will close or that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of these uncertainties. | |||||||||||||||||
Subsequent Events | |||||||||||||||||
The Company has evaluated events that occurred subsequent to September 30, 2014 through the date these financial statements were issued. Management has concluded that no additional subsequent events required disclosure in these financial statements, except as disclosed in Note 8. | |||||||||||||||||
Short_Term_Debt
Short Term Debt | 9 Months Ended |
Sep. 30, 2014 | |
Short Term Debt [Abstract] | ' |
Short Term Debt | ' |
3. Short-Term Debt | |
On November 1, 2013, Kitara Media secured a three-year $5,000 credit facility with Wells Fargo Bank, National Association (the “Lender”). The line may be increased to $10,000 at Kitara Media’s option on or prior to April 30, 2015 in two equal tranches of $2,500 each. The interest rate on the credit facility is Libor plus 4.25% with a minimum interest charge of $10 per month. Various fees are payable to the Lender from time to time, including origination fees and unused line fees. | |
On June 30, 2014, the Company amended the credit and security agreement with the Lender to include the accounts receivable of its subsidiary, Health Guru Media, and to make various changes to the financial covenants. | |
The credit facility, as amended, contains various financial covenants including that the Company maintain minimum liquidity (as defined in the credit facility) of $1,500 and make no more than $100 in capital expenditures in any fiscal year, other than capitalized software development costs (as defined in the credit facility), which may not be in excess of $1,200 for fiscal year 2014 and $1,000 in any subsequent fiscal year. As of September 30, 2014, the Company was in compliance with its financial covenants. Amounts due under the credit agreement are secured by a continuing security interest in substantially all of Kitara Media’s assets and also pledges by the Company of its ownership interests in its other wholly-owned subsidiaries, Health Guru Media, NYPG and Andover Games. Outstanding advances under the Credit Agreement may not at any time exceed a Borrowing Base (as defined below) less amounts outstanding under letters of credit. The Borrowing Base is equal to 85% of eligible accounts receivable plus the lesser of 75% of eligible unbilled accounts receivable or $500 less reserves established by Lender from time to time less $500. Kitara Media shall maintain at all times minimum excess availability of not less than $500. The credit line terminates on November 1, 2016, at which time all amounts outstanding must be paid. The facility is treated as a current liability because among other provisions, the agreement requires that the Company maintain a lockbox arrangement and contains certain subjective acceleration clauses. In addition, the bank may at its discretion, adjust the availability of the arrangement. | |
At September 30, 2014, the outstanding balance was $1,628, and as of December 31, 2013 the outstanding balance was $841. | |
In conjunction with the acquisition of Health Guru Media, the Company acquired certain debts as follows: | |
On June 10, 2011, Health Guru Media obtained a commitment from a lender to borrow an aggregate of $3,000. The commitment was divided into two tranches. The first tranche was for $2,000 which expired on October 1, 2014. The second tranche was for $1,000 and expires on December 1, 2014. On January 31, 2012, Health Guru Media obtained an additional growth capital loan on its second commitment (“Tranche 3”) in the amount of $500 which expires on December 1, 2014. | |
Interest is payable monthly at an annual interest rate which is a sum of the prime rate, as published by The Wall Street Journal, plus 9.75% per annum (the “Combined Interest Rate”). In no event shall the designated rate be less than 13%. At September 30, 2014, the interest rate on this debt was 13%. As of September 30, 2014, the total balance on the notes was $247, and as of December 31, 2013 the outstanding balance was $1,383. | |
In June 2013, Health Guru Media secured a one (1) year receivable financing arrangement with Sterling National Bank – Factoring and Trade Finance Division (“the Bank”). Health Guru Media presented invoices to the Bank who then advanced it up to 60% of eligible invoices and could remain outstanding for up to 120 days of the invoice date or 60 days past due. The Bank charged a commission rate of .35% of the gross invoice. All debits in the account bore interest daily at a rate equal to 1.75% above prime rate as published in the Wall Street Journal. On June 18, 2014, in connection with the amendment of the credit and security agreement with the Lender, the Bank received payment in full of the outstanding amounts under the financing arrangement and it was thereafter immediately terminated. As of September 30, 2014 the total balance outstanding was $0, and as of December 31, 2013 the outstanding balance was $1,080. | |
On March 26, 2014, in consideration of amounts loaned to the Company, the Company issued a promissory note in favor of Ironbound, with a principal amount of $1,000. The principal balance, together with interest, was due on the earlier of (a) April 25, 2014 and (b) the consummation by the Company of a private placement of its equity or debt securities or any other financing raising gross proceeds of at least $1,000 (either the “Maturity Date”). See Note 1 regarding the conversion of this note to equity. | |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies [Abstract] | ' | ||||
Commitments and Contingencies | ' | ||||
4. Commitments and Contingencies | |||||
Legal Proceedings | |||||
The Company is involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. | |||||
In December 2013, an action entitled Intrepid Investments, LLC ("Intrepid") v. Selling Source, LLC, et al., Index No. 65429/2013 was filed in the Supreme Court of the State of New York, County of New York. This is an action commenced by Intrepid to collect on a Junior Secured Promissory Note signed by Selling Source in the original principal sum of $28,700 (the "Note"). Kitara Media is not a signatory to the Note but it did sign an August 31, 2010 Security Agreement ("Security Agreement") pledging certain of its assets as security for the Note. At the time Kitara Media signed the Security Agreement, it was wholly-owned by Selling Source. On July 1, 2013, Kitara Media merged with K/N Merger Sub, with Kitara Media surviving the merger and becoming the Company’s wholly-owned subsidiary. Accordingly, it is no longer wholly-owned by Selling Source, although it is still an affiliate of Selling Source. In the action, Intrepid seeks to foreclose on the security interest. Both Selling Source’s and Kitara Media’s obligations to Intrepid under the Note and Security Agreement were subordinate to obligations Selling Source had to two groups of prior lenders ("Senior Lenders"). The right of Intrepid to compel payments under the Note and/or foreclose the lien created by the Security Agreement was subject to an Intercreditor Agreement by and between the Senior Lenders and Intrepid. Under the terms of the Intercreditor Agreement, Intrepid could not take steps to compel Selling Source to make payment on the Note or foreclose the Security Agreement so long as the obligations to the Senior Lenders remained outstanding. In addition, under the terms of the Intercreditor Agreement, the Senior Lenders had the right to have the lien released on any of the collateral pledge as security under the Security Agreement. In connection with the merger of K/N Merger Sub LLC and Kitara Media, the first priority Senior Lenders released the lien on Kitara Media’s assets which were pledged as collateral under the Security Agreement and the obligation of Kitara Media to Intrepid was released. In addition, Selling Source’s obligations to the Senior Lenders remains outstanding. Based on these facts, Kitara Media believes Intrepid’s claim is without merit and intends to defend it vigorously. In any event, Selling Source has acknowledged an obligation to indemnify and defend Kitara Media from any liability to Intrepid arising out of the Note and Security Agreement. The parties have exchanged pleadings and discovery has commenced. | |||||
Legal Proceedings, continued | |||||
In December 2013, a second matter entitled Intrepid Investments, LLC v. Selling Source, LLC, Index No.: 65430912013 was filed in the Supreme Court of The State of New York County. This matter was originally limited to claims asserted by Intrepid against Selling Source regarding an earn-out calculation entered into between it and Selling Source, which calculation was confirmed by an arbitrator in November 2013. On September 11, 2014, Intrepid amended its complaint, however, to include various breach of contract claims against a variety of other defendants, including Kitara Media. The new defendants, including Kitara Media, answered this complaint on November 7, 2014 indicating that | |||||
Since these matters are in their early stages, it is not yet possible for the Company and its legal counsel to assess the amount or range of potential loss, if any, in the event of an unfavorable outcome. | |||||
Operating Leases | |||||
On September 29, 2014, upon the expiration of its existing lease, the Company entered into a new lease with its landlord. The new lease, which commenced on September 30, 2014, is for a total of 10,000 square feet of space and has an initial lease term of 66 months with the Company occupying the initial 7,500 square feet of space on September 30, 2014 at a monthly rent of $22 with a plan to occupy the remaining 2,500 square feet of space approximately on January 1, 2015, at an additional monthly rent of $8. Rent expense for the three months ended September 30, 2014 and 2013 was $88 and $57, respectively and $409 and $163 for the nine months ended September 30, 2014 and 2013, respectively. Health Guru Media had a lease which was set to terminate in September 2015. In January 2014, this lease was terminated, effective April 30, 2014, which required the payment of a termination fee of $50. | |||||
The future minimum lease payments are as follows: | |||||
For the Year Ended December 31, | Amount | ||||
2014 (three months) | $ | - | |||
2015 | 217 | ||||
2016 | 261 | ||||
2017 | 265 | ||||
2018 | 276 | ||||
Thereafter | 346 | ||||
Total | $ | 1,365 | |||
Stockbased_Compensation
Stock-based Compensation | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Stock-based Compensation [Abstract] | ' | ||||||||||||||||||||
Stock-based Compensation | ' | ||||||||||||||||||||
5. Stock-based Compensation | |||||||||||||||||||||
Stock Options | |||||||||||||||||||||
The fair value of stock options is amortized on a straight line basis over the requisite service periods of the respective awards. Stock based compensation expense related to stock options was $68 and $0 for the three months ended September 30, 2014 and 2013, respectively, and $381 and $0 for the nine months ended September 30, 2014 and 2013, respectively, and is reflected in selling, general and administrative expenses on the accompanying unaudited interim condensed consolidated statements of operations. As of September 30, 2014, the unamortized value of options was $883. As of September 30, 2014, the unamortized portion will be expensed through 2018, and the weighted average remaining amortization period was 3.1 years. | |||||||||||||||||||||
Number of | Weighted | Weighted | Weighted | Aggregate Intrinsic | |||||||||||||||||
Options | Average | Average | Average | Value | |||||||||||||||||
Exercise | Grant Date | Remaining | |||||||||||||||||||
Price | Fair Value | Life In | |||||||||||||||||||
Years | |||||||||||||||||||||
Outstanding, January 1, 2014 | 9,150,000 | $ | 0.31 | $ | 0.13 | 4.7 | $ | 10,013 | |||||||||||||
Granted | 1,420,000 | 0.34 | 0.4 | 4.6 | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Forfeited | (1,700,000 | ) | 0.31 | 0.22 | - | - | |||||||||||||||
Outstanding September 30, 2014 | 8,870,000 | $ | 0.31 | $ | 0.15 | 4 | $ | 3,198 | |||||||||||||
Exercisable, January 1, 2014 | 212,500 | $ | 0.24 | $ | 0.1 | 4.5 | $ | 245 | |||||||||||||
Vested | 2,162,522 | 0.41 | 0.17 | - | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Forfeited | - | - | - | - | - | ||||||||||||||||
Exercisable, September 30, 2014 | 2,375,022 | $ | 0.4 | $ | 0.17 | 4.1 | $ | 652 | |||||||||||||
The Black-Scholes method options pricing model was used to estimate fair value as of the date of grants during the three and nine months ended September 30, 2014 using the following assumptions. | |||||||||||||||||||||
The simplified method was used to determine the expected life as set out in SEC Staff Accounting Bulletin No. 110 using the vesting term of 3 years and the contractual term of 5 years. The simplified method defines the expected life as the average of the contractual term and the vesting period. | |||||||||||||||||||||
May 8, 2014 Option Grants | May 8, 2014 Non – Plan Option Grant | ||||||||||||||||||||
Exercise Price | $ | 0.04 | $ | 0.6 | |||||||||||||||||
Stock Price | $ | 0.6 | $ | 0.6 | |||||||||||||||||
Number of shares | 670,000 | 750,000 | |||||||||||||||||||
Dividend Yield | 0 | % | 0 | % | |||||||||||||||||
Expected Volatility | 55 | % | 55 | % | |||||||||||||||||
Risk-free interest rate | 1.63 | % | 1.63 | % | |||||||||||||||||
Expected Life | 3.75 | 5 | |||||||||||||||||||
There were no options granted during the three months ended September 30, 2014. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
6. Related Party Transactions | |
The Company has received various accounting, human resource and information technology services from the Kitara Signing Holder, a significant shareholder of the Company. For the three months ended September 30, 2014 and 2013, the Company recorded management fees for services performed by the Kitara Signing Holder on behalf of the Company of $0 and $96, respectively. For the nine months ended September 30, 2014 and 2013, the Company recorded management fees for services performed by the Kitara Signing Holder on behalf of the Company of $0 and $250, respectively. |
Acquisition
Acquisition | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Acquisition [Abstract] | ' | ||||||||
Acquisition | ' | ||||||||
7. Acquisition | |||||||||
NYPG Acquisition | |||||||||
On June 12, 2013, the Company entered into the K/N Merger Agreement with K/N Merger Sub LLC, K/N Merger Sub Inc., Kitara Media, NYPG, the Kitara Signing Holder and the NYPG Signing Holder. The K/N Merger Agreement contemplated the (i) merger of K/N Merger Sub LLC with and into Kitara Media with Kitara Media surviving the merger and (ii) merger of K/N Merger Sub Inc. with and into NYPG with NYPG surviving the merger. | |||||||||
On July 1, 2013, the Company consummated the transactions contemplated by the K/N Merger Agreement. At the close of the Merger, the NYPG Signing Holder received (a) an aggregate of 10,000,000 shares of the Company’s common stock and (b) the Closing Notes, one in the amount of $100 which was due and payable on January 1, 2014 (which was subsequently extended through January 1, 2015) and one in the amount of $200 being due and payable on January 1, 2023 to replace the existing advances from the stockholder of NYPG. Each of the Closing Notes accrues interest at a rate of 1% per annum, which will be due at the time the Closing Notes become due and payable. The aggregate purchase price of the transaction was $2,000. | |||||||||
For accounting purposes, the acquisition of NYPG by the Company was treated as a business combination. | |||||||||
Health Guru Acquisition | |||||||||
On December 3, 2013, the Company entered into a Merger Agreement and Plan of Organization (“Health Guru Merger Agreement”) by and among the Company, Kitara Media Sub, Inc. (“Merger Sub”), Health Guru Media and certain securityholders of Health Guru Media, which securityholders held a majority of the outstanding shares of capital stock of Health Guru Media and simultaneously consummated the transactions contemplated thereby (the “Closing”). | |||||||||
At the Closing, pursuant to the Health Guru Merger Agreement, Merger Sub was merged with and into Health Guru Media, with Health Guru Media surviving as a wholly owned subsidiary of the Company (the “HG Acquisition”). All of the shares of capital stock of Health Guru Media outstanding immediately prior to the HG Acquisition were automatically canceled and converted into the right for such holders to receive an aggregate of 18,000,000 shares of the Company’s common stock. Simultaneously, all of Health Guru Media’s stock options and warrants to purchase common stock which were outstanding prior to the HG Acquisition were cancelled. Based on a valuation prepared by an independent appraiser, the total purchase price of the transaction was $8,600. | |||||||||
For accounting purposes, the acquisition of Health Guru Media by the Company was treated as a business combination. | |||||||||
Unaudited pro forma combined financial information | |||||||||
The following presents the unaudited pro forma combined financial information, as if the mergers and acquisitions of NYPG and Health Guru Media had occurred as of January 1, 2013: | |||||||||
Three Months Ended | Nine Months Ended September 30, 2013 | ||||||||
30-Sep-13 | |||||||||
Revenue | $ | 9,533 | $ | 24,695 | |||||
Net (Loss) | $ | (445 | ) | $ | (2,733 | ) | |||
Net (Loss) per Common Share – Basic and Diluted | $ | (0.01 | ) | $ | (0.03 | ) | |||
Weighted-Average Number of shares outstanding – | 83,156,969 | 83,156,969 | |||||||
Basic and Diluted | |||||||||
The pro forma combined results of operations are not necessarily indicative of the results of operations that actually would have occurred had the Mergers and the acquisition of Health Guru Media and NYPG been completed as of January 1, 2013, nor are they necessarily indicative of future consolidated results. | |||||||||
Subsequent_Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Event | ' |
8. Subsequent Events | |
On October 10, 2014, the Company, entered into the Exchange Agreement with Future Ads, LLC, and Kitara Holdco Corp., a Delaware corporation and wholly owned subsidiary of the Company. Following the consummation of the transactions contemplated by the Exchange Agreement and Reorganization Agreement, the newly formed Holdco will become a new publicly traded company, Kitara and Future Ads will become wholly-owned subsidiaries of Holdco and the former members of Future Ads will own the majority of the fully-diluted stock of Holdco. Pursuant to the Exchange Agreement, immediately following the Merger and as part of a single integrated transaction, the Transferors will contribute 100% of the issued and outstanding equity interests of Future Ads to Holdco in exchange for (i) such number of shares of Holdco Common Stock that represents 53% of the fully diluted shares of Holdco Common Stock outstanding as of the closing of the transactions; (ii) $80,000 in cash; (iii) the right to receive performance-based EBITDA “earn out” payments that would enable the Transferors to receive up to an additional $40,000 in cash or stock consideration during the 2015 to 2018 fiscal years; (iv) on or prior to June 30, 2016, $10,000 in cash and/or shares of Holdco Common Stock; and (v) on or about the fourth anniversary of the Closing, $6,000 in cash. The transactions contemplated by the Exchange Agreement will only be consummated if the transactions contemplated by the Reorganization Agreement are also consummated. In addition, consummation of the transactions contemplated by the Exchange Agreement is subject to other customary closing conditions, including the receipt of all requisite antitrust approvals and the absence of any government order or other legal restraint prohibiting the transaction. The transactions will be financed by Highbridge. Highbridge has committed, subject to certain conditions, to provide $96,000 in senior secured debt financing to Holdco and certain of its subsidiaries (including the Company and Future Ads), consisting of an $81,000 term facility and a $15,000 revolving facility (no more than $7,500 of which will be funded at closing). When closed, the debt will accrue interest at three month LIBOR (but no less than 1% and no more than 3%) plus 6% in the case of the revolving facility and 9% in the case of the term facility. Interest will be payable quarterly and the term facility will have a scheduled amortization of $7,000 per annum (payable quarterly). The maturity date for the debt is four years after the closing. Upon such maturity, Holdco is required to pay Highbridge a deferred fee of $12,500, in addition to outstanding principal and interest due on such date. | |
On October 10, 2014, Lisa VanPatten resigned as the Company’s Chief Financial Officer. On October 14, 2014, Howard R. Yeaton, Jr., was appointed to the position of Interim Chief Financial Officer. | |
On October 14, 2014, Joshua Silberstein resigned as the President and a member of the board of directors of the Company, effective as of December 31, 2014. In connection with his resignation, the Company entered into a separation agreement (the "Separation Agreement"), with Mr. Silberstein. Under the Separation Agreement, subject to certain conditions (i) the Company will pay Mr. Silberstein a bonus equal to three months of his base salary. The Company will engage Mr. Silberstein as a consultant for nine months for a monthly fee of approximately $30, subject to adjustment in certain circumstances, and (iii) at the effective time of his resignation, Mr. Silberstein's outstanding employee stock options, pursuant to which he has the right to purchase 2,500,000 shares of Kitara Common Stock, will be amended so that they survive his resignation and 250,000 of the unvested shares vest immediately, with the remainder vesting upon the achievement of certain business and financial performance goals. The Separation Agreement also contains covenants restricting Mr. Silberstein's ability to compete with the Company for one year following the effective date of his resignation. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
The accompanying unaudited interim condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the SEC regarding unaudited interim financial information. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s Condensed Consolidated Balance Sheets, Statements of Operations, and Cash Flows for the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full year due to seasonal and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with US GAAP have been omitted in accordance with the rules and regulations of the SEC. Accordingly, these unaudited interim condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2014. | |||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in the accompanying unaudited interim condensed consolidated financial statements. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The Company’s unaudited interim condensed consolidated financial statements are prepared in conformity with US GAAP, which requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. The Company’s most significant estimates relate to the accounts receivable allowance, the valuation allowance on deferred tax assets, the valuation of stock options, the valuation of contingent consideration from historical business combinations, and the value of intangible assets and goodwill. | |||||||||||||||||
Concentration of Credit Risk and Significant Customers | ' | ||||||||||||||||
Concentration of Credit Risk and Significant Customers | |||||||||||||||||
The Company’s concentration of credit risk includes its concentrations from key customers and vendors. The details of these significant customers and vendors are presented in the following table for the three and nine months ended September 30, 2014 and 2013; | |||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
The Company’s largest customers are presented below as a percentage of the Company’s aggregate: | |||||||||||||||||
Revenue | 20.9% and 14.8% of revenue, or 35.7% of revenue in the aggregate | 26.5%, 22.7% and 19.2% of revenue, or 68.4% of revenue in the aggregate | 18.7%, 10.7% and 10.1% of revenue, or 39.5% of revenue in the aggregate | 26.0% and 15.8% of revenue, or 41.8% of revenue in the aggregate | |||||||||||||
Accounts receivable | 16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | 30.5%, 21.9% and 19.0% of accounts receivable, or 71.4% of accounts receivable in the aggregate | 16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | 30.5% and 19.0% of accounts receivable, or 49.5% of accounts receivable in the aggregate | |||||||||||||
The Company’s largest vendors are presented below as a percentage of the Company’s aggregate: | |||||||||||||||||
Cost of revenues | 30.4%, 24.6% and 19.1% of cost of revenues, or 74.1% of cost of revenues in the aggregate | 50.1% of cost of revenues from one vendor | 23.2%, 19.1%, 18.3% and 12.7% of cost of revenues, or 73.3% of cost of revenues in the aggregate | 31.6%, 12.5% of cost of revenues, or 44.1% of cost of revenues in the aggregate | |||||||||||||
Accounts payable | 32.8% and 14.7% of accounts payable, or 47.5% of accounts payable in the aggregate | 39.7% of accounts payable from one vendor | 32.8% and 14.7% of accounts payable, or 47.5% related to accounts payable in the aggregate | 39.7% accounts payable from one vendor | |||||||||||||
Kitara Media operates in a free market bid-based environment. Customer concentration is a reflection of obtaining the highest bid. | |||||||||||||||||
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and accounts receivable. Cash is deposited with a limited number of financial institutions. The balances held at any one financial institution may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. Accounts are insured by the FDIC up to $250. As of September 30, 2014 and December 31, 2013, the Company held cash balances in excess of federally insured limits. | |||||||||||||||||
Credit is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for doubtful accounts and sales credits. | |||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
ASC Topic 825 “Financial Instruments” requires that fair value be disclosed for the Company’s financial instruments. The Company’s financial instruments, including cash, accounts receivable, accounts payable, short term debt, note payables and accrued liabilities are carried at historical cost basis. At September 30, 2014 and December 31, 2013, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. The contingent consideration related to a previous acquisition is measured at fair value on a recurring basis and adjusted accordingly. | |||||||||||||||||
Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: | |||||||||||||||||
● | Level 1: Quoted prices in active markets for identical assets or liabilities. | ||||||||||||||||
● | Level 2: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. | ||||||||||||||||
● | Level 3: Significant unobservable inputs that cannot be corroborated by market data. | ||||||||||||||||
Level 3 financial liabilities measured at fair value on a recurring basis consist of the contingent obligation to Skyword, the entity that sold Gather.com to Health Guru Media prior to the Company’s acquisition of Health Guru Media, for which there is no current market such that the determination of fair value requires significant judgment or estimation. Future payments are contingent on revenue levels and as a result, the liability is remeasured at fair value on a recurring basis. 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. | |||||||||||||||||
The contingent consideration for the purchase of Gather.com consists of a five year arrangement to pay royalties to Skyword (“Skyword Royalty”). The Skyword Royalty is to be paid in quarterly installments and is based on revenues generated by the assets purchased. The Skyword Royalty is paid pursuant to the table below. | |||||||||||||||||
Skyword Royalty Payment Schedule | Royalty Rate | ||||||||||||||||
Applied to | |||||||||||||||||
Revenues for | |||||||||||||||||
Stated Period | |||||||||||||||||
09/01/13 to 02/28/14 | 5 | % | |||||||||||||||
03/01/14 to 8/31/14 | 15 | % | |||||||||||||||
09/01/14 to 02/28/15 | 20 | % | |||||||||||||||
03/01/15 to 09/15/17 | 25 | % | |||||||||||||||
The royalty amount is capped and cannot exceed $2,000. At the end of the fifth year, there is a settlement provision. An amount representing $2,000 less the aggregate amount of the Skyword Royalty paid through such fifth year is deemed the “Remainder.” If (i) the Remainder is $0, then no further action is necessary, (ii) if the Remainder is greater than $0, then Health Guru Media may pay the full dollar value of the Remainder to Skyword in full satisfaction of the obligation, or, (iii) if Health Guru Media does not exercise its option to pay the remainder in full, then Health Guru Media shall select a dollar value between $0 and the Remainder (“Settlement Value”). Skyword then has the option to accept receipt of the Settlement Value in full satisfaction or (iv) Skyword pays Health Guru Media the Settlement Value and thus reclaims all assets of the Gather business. | |||||||||||||||||
Fair Value of Financial Instruments, continued | |||||||||||||||||
The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the assets that are measured at fair value on a recurring basis. | |||||||||||||||||
Condensed Consolidated | Quoted Prices in Active Markets for Identical Assets or Liabilities | Quoted Prices for Similar Assets or Liabilities in Active Markets | Significant | ||||||||||||||
Balance Sheet | (Level 1) | (Level 2) | Unobservable | ||||||||||||||
Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | |||||||||||||||||
30-Sep-14 | $ | 224 | $ | - | $ | - | $ | 224 | |||||||||
31-Dec-13 | $ | 224 | $ | - | $ | - | $ | 224 | |||||||||
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 Nine Months Ended September 30, 2014 | |||||||||||||||||
Beginning balance at January 1, 2014 | $ | 224 | |||||||||||||||
Change in fair value of contingent consideration | - | ||||||||||||||||
Ending balance at September 30, 2014 | $ | 224 | |||||||||||||||
The contingent obligation to Skyword at September 30, 2014, recorded in connection with Health Guru Media’s purchase of Gather.com in September 2012, is classified within Level 3 of the valuation hierarchy. In order to determine the fair value of the contingent obligation to Skyword, using historical performance, the Company estimates the future cash flows from the Gather.com website and then applies a discount rate of 35%. This valuation is completed quarterly and the contingent obligation is adjusted accordingly. | |||||||||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s Chief Financial Officer determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Interim Chief Financial Officer. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
In its interim financial statements, the Company follows the guidance in ASC 270, “Interim Reporting” and ASC 740 “Income Taxes”, whereby the Company utilizes the expected annual effective tax rate in determining its income tax provisions for the interim periods. That rate differs from U.S. statutory rates primarily as a result of the valuation allowance recorded on net operating loss carryforwards and permanent differences between book and tax reporting. | |||||||||||||||||
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement, and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction. | |||||||||||||||||
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liabilities. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. | |||||||||||||||||
The Company accounts for uncertain tax positions in accordance with ASC 740—“Income Taxes”. No uncertain tax provisions have been identified. The Company accrues interest and penalties, if incurred, on unrecognized tax benefits as components of the income tax provision in the accompanying unaudited interim condensed consolidated statements of operations. | |||||||||||||||||
In accordance with ASC 740, the Company evaluates whether a valuation allowance should be established against the net deferred tax assets based upon the consideration of all available evidence and using a “more likely than not” standard. Significant weight is given to evidence that can be objectively verified. The determination to record a valuation allowance is based on the recent history of cumulative losses and current operating performance. In conducting the analysis, the Company utilizes an approach, which considers the current year loss, including an assessment of the degree to which any losses are driven by items that are unusual in nature and incurred to improve future profitability. In addition, the Company reviews changes in near-term market conditions and any other factors arising during the period, which may impact its future operating results. | |||||||||||||||||
Net earnings per share | ' | ||||||||||||||||
Net earnings per share | |||||||||||||||||
Basic net earnings per common share is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon the exercise of stock options and a warrant. The computation of diluted earnings per share excludes those with an exercise price in excess of the average market price of the Company’s common shares during the periods presented. | |||||||||||||||||
The computation of diluted earnings per share excludes outstanding options in periods where the exercise of such options and warrants would be anti-dilutive. For the three and nine months ended September 30, 2014, there were 8,870,000 options and warrants for the purchase of 6,363,636 shares, excluded from the computation of earnings per share because they were anti-dilutive. For the three and nine months ended September 30, 2013 there were 2,425,000 options excluded from the computation of earnings per share because they were anti-dilutive. | |||||||||||||||||
The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share for the three and nine months ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Weighted average number of shares outstanding, basic | 95,884,241 | 59,011,675 | 90,383,076 | 33,146,792 | |||||||||||||
Effect of dilutive securities, common share equivalents | - | 787,229 | - | 262,409 | |||||||||||||
Weighted average number of shares outstanding, diluted | 95,884,241 | 59,798,904 | 90,383,076 | 33,409,201 | |||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
The FASB has issued ASU No. 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. This standard is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, U.S. GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. This amendment is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations. | |||||||||||||||||
The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“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. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations. | |||||||||||||||||
The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations. | |||||||||||||||||
Accounting standards that have been issued or proposed by the FASB, SEC and/or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. | |||||||||||||||||
Liquidity | ' | ||||||||||||||||
Liquidity and Going Concern | |||||||||||||||||
The Company will need to raise additional capital through loans or additional investments from its shareholders, officers, directors, or third parties in order to meet its cash requirements for the next twelve months. None of the shareholders, officers or directors is under any obligation to advance funds to, or to invest in, the Company. Accordingly, on a standalone basis, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. | |||||||||||||||||
The Company has entered into an Exchange agreement with Future Ads, which it is seeking to close prior to the end of 2014 (as described further in Note 8 – Subsequent Events). The Company anticipates that the post-merger combined Company would have sufficient liquidity to fund operations. The closing of the merger, however, is dependent on financing provided by Highbridge. The merger financing provided by Highbridge, is subject to certain pre closing conditions. Accordingly, the Company cannot provide any assurance that the merger with Future Ads will close or that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of these uncertainties. | |||||||||||||||||
Subsequent Events | ' | ||||||||||||||||
Subsequent Events | |||||||||||||||||
The Company has evaluated events that occurred subsequent to September 30, 2014 through the date these financial statements were issued. Management has concluded that no additional subsequent events required disclosure in these financial statements, except as disclosed in Note 8. | |||||||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedules of concentration of credit risk | ' | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
The Company’s largest customers are presented below as a percentage of the Company’s aggregate: | |||||||||||||||||
Revenue | 20.9% and 14.8% of revenue, or 35.7% of revenue in the aggregate | 26.5%, 22.7% and 19.2% of revenue, or 68.4% of revenue in the aggregate | 18.7%, 10.7% and 10.1% of revenue, or 39.5% of revenue in the aggregate | 26.0% and 15.8% of revenue, or 41.8% of revenue in the aggregate | |||||||||||||
Accounts receivable | 16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | 30.5%, 21.9% and 19.0% of accounts receivable, or 71.4% of accounts receivable in the aggregate | 16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | 30.5% and 19.0% of accounts receivable, or 49.5% of accounts receivable in the aggregate | |||||||||||||
The Company’s largest vendors are presented below as a percentage of the Company’s aggregate: | |||||||||||||||||
Cost of revenues | 30.4%, 24.6% and 19.1% of cost of revenues, or 74.1% of cost of revenues in the aggregate | 50.1% of cost of revenues from one vendor | 23.2%, 19.1%, 18.3% and 12.7% of cost of revenues, or 73.3% of cost of revenues in the aggregate | 31.6%, 12.5% of cost of revenues, or 44.1% of cost of revenues in the aggregate | |||||||||||||
Accounts payable | 32.8% and 14.7% of accounts payable, or 47.5% of accounts payable in the aggregate | 39.7% of accounts payable from one vendor | 32.8% and 14.7% of accounts payable, or 47.5% related to accounts payable in the aggregate | 39.7% accounts payable from one vendor | |||||||||||||
Schedule of royalty payment | ' | ||||||||||||||||
Skyword Royalty Payment Schedule | Royalty Rate | ||||||||||||||||
Applied to | |||||||||||||||||
Revenues for | |||||||||||||||||
Stated Period | |||||||||||||||||
09/01/13 to 02/28/14 | 5 | % | |||||||||||||||
03/01/14 to 8/31/14 | 15 | % | |||||||||||||||
09/01/14 to 02/28/15 | 20 | % | |||||||||||||||
03/01/15 to 09/15/17 | 25 | % | |||||||||||||||
Fair value, assets measured on recurring basis | ' | ||||||||||||||||
Condensed Consolidated | Quoted Prices in Active Markets for Identical Assets or Liabilities | Quoted Prices for Similar Assets or Liabilities in Active Markets | Significant | ||||||||||||||
Balance Sheet | (Level 1) | (Level 2) | Unobservable | ||||||||||||||
Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | |||||||||||||||||
30-Sep-14 | $ | 224 | $ | - | $ | - | $ | 224 | |||||||||
31-Dec-13 | $ | 224 | $ | - | $ | - | $ | 224 | |||||||||
Fair value of the Company Level Three financial liabilities | ' | ||||||||||||||||
For the Nine Months Ended September 30, 2014 | |||||||||||||||||
Beginning balance at January 1, 2014 | $ | 224 | |||||||||||||||
Change in fair value of contingent consideration | - | ||||||||||||||||
Ending balance at September 30, 2014 | $ | 224 | |||||||||||||||
Schedule of anti dilutive securities excluded from computation of earnings per share | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Weighted average number of shares outstanding, basic | 95,884,241 | 59,011,675 | 90,383,076 | 33,146,792 | |||||||||||||
Effect of dilutive securities, common share equivalents | - | 787,229 | - | 262,409 | |||||||||||||
Weighted average number of shares outstanding, diluted | 95,884,241 | 59,798,904 | 90,383,076 | 33,409,201 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies [Abstract] | ' | ||||
Summary of Future minimum lease payments | ' | ||||
For the Year Ended December 31, | Amount | ||||
2014 (three months) | $ | - | |||
2015 | 217 | ||||
2016 | 261 | ||||
2017 | 265 | ||||
2018 | 276 | ||||
Thereafter | 346 | ||||
Total | $ | 1,365 | |||
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Stock-based Compensation [Abstract] | ' | ||||||||||||||||||||
Summary of employee stock options activity | ' | ||||||||||||||||||||
Number of | Weighted | Weighted | Weighted | Aggregate Intrinsic | |||||||||||||||||
Options | Average | Average | Average | Value | |||||||||||||||||
Exercise | Grant Date | Remaining | |||||||||||||||||||
Price | Fair Value | Life In | |||||||||||||||||||
Years | |||||||||||||||||||||
Outstanding, January 1, 2014 | 9,150,000 | $ | 0.31 | $ | 0.13 | 4.7 | $ | 10,013 | |||||||||||||
Granted | 1,420,000 | 0.34 | 0.4 | 4.6 | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Forfeited | (1,700,000 | ) | 0.31 | 0.22 | - | - | |||||||||||||||
Outstanding September 30, 2014 | 8,870,000 | $ | 0.31 | $ | 0.15 | 4 | $ | 3,198 | |||||||||||||
Exercisable, January 1, 2014 | 212,500 | $ | 0.24 | $ | 0.1 | 4.5 | $ | 245 | |||||||||||||
Vested | 2,162,522 | 0.41 | 0.17 | - | - | ||||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Forfeited | - | - | - | - | - | ||||||||||||||||
Exercisable, September 30, 2014 | 2,375,022 | $ | 0.4 | $ | 0.17 | 4.1 | $ | 652 | |||||||||||||
Summary of assumptions to estimate the fair value of options granted | ' | ||||||||||||||||||||
May 8, 2014 Option Grants | May 8, 2014 Non – Plan Option Grant | ||||||||||||||||||||
Exercise Price | $ | 0.04 | $ | 0.6 | |||||||||||||||||
Stock Price | $ | 0.6 | $ | 0.6 | |||||||||||||||||
Number of shares | 670,000 | 750,000 | |||||||||||||||||||
Dividend Yield | 0 | % | 0 | % | |||||||||||||||||
Expected Volatility | 55 | % | 55 | % | |||||||||||||||||
Risk-free interest rate | 1.63 | % | 1.63 | % | |||||||||||||||||
Expected Life | 3.75 | 5 |
Acquisition_Tables
Acquisition (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Acquisition [Abstract] | ' | ||||||||
Shedule of unaudited pro forma consolidated results of operations | ' | ||||||||
Three Months Ended | Nine Months Ended September 30, 2013 | ||||||||
30-Sep-13 | |||||||||
Revenue | $ | 9,533 | $ | 24,695 | |||||
Net (Loss) | $ | (445 | ) | $ | (2,733 | ) | |||
Net (Loss) per Common Share – Basic and Diluted | $ | (0.01 | ) | $ | (0.03 | ) | |||
Weighted-Average Number of shares outstanding – | 83,156,969 | 83,156,969 | |||||||
Basic and Diluted | |||||||||
Organization_and_Description_o1
Organization and Description of Business (Details) (USD $) | 0 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | ||||||||
In Thousands, except Share data, unless otherwise specified | 8-May-14 | Nov. 01, 2013 | Jul. 01, 2013 | Jul. 01, 2013 | Jul. 01, 2013 | Jul. 01, 2013 | Oct. 10, 2014 | Dec. 03, 2013 | Jul. 01, 2013 | Apr. 25, 2014 | Apr. 29, 2014 | Sep. 30, 2014 |
Promissory Notes 1 [Member] | Promissory Notes 2 [Member] | Kitara Signing Holders [Member] | NYPG Signing Holder [Member] | Subsequent Event [Member] | Health Guru Media Merger Agreement [Member] | Purchase Agreement [Member] | Purchase Agreement [Member] | Purchase Agreement [Member] | Purchase Agreement [Member] | |||
Organization and Description of Business (Textual) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Due date of notes payable | ' | 30-Apr-15 | 1-Jan-15 | 1-Jan-23 | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of stock, amount received | ' | ' | ' | ' | ' | ' | ' | ' | $2,000 | $7,000 | ' | ' |
Aggregate number of shares sold of common stock | ' | ' | ' | ' | ' | ' | ' | ' | 4,000,000 | 12,727,272 | ' | ' |
Shares issued for services | ' | ' | ' | ' | ' | ' | ' | 18,000,000 | ' | ' | ' | ' |
Shares issued for private offering | ' | ' | ' | ' | ' | ' | ' | 2,000 | ' | ' | ' | ' |
Private offering price | ' | ' | ' | ' | ' | ' | ' | $0.50 | ' | ' | ' | ' |
Percentage of shares purchased in offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' |
Warrants to purchase of common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,363,636 | ' | ' |
Warrant exercise price, per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.83 | ' | ' |
Warrants expiration date | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30-Apr-19 | ' | ' |
Share Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.55 | ' | ' |
Proceeds from offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,500 | ' |
Amount of debt cancelled | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000 | ' |
Commissions and expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 500 | ' |
Liquidated damages description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'The amount of the liquidated damages is 1.0% of the aggregate subscription amount paid by an Investor for the shares affected by the event that are still held by the Investor upon the occurrence of the event, and monthly thereafter, up to a maximum of 10.0%. |
Issuance of option to purchase common stock | 750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Option exercise price | $0.60 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage fully-diluted stock of Holdco | ' | ' | ' | ' | ' | ' | 53.00% | ' | ' | ' | ' | ' |
Financing of debt to Holdco | ' | ' | ' | ' | ' | ' | 96,000 | ' | ' | ' | ' | ' |
Business acquistion shares issued | ' | ' | ' | ' | 20,000,000 | 10,000,000 | ' | ' | ' | ' | ' | ' |
Due and payable | ' | ' | 100 | 200 | ' | ' | ' | ' | ' | ' | ' | ' |
Due date of notes payable | ' | 30-Apr-15 | 1-Jan-15 | 1-Jan-23 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock for cancellation without the payment of any additional consideration | ' | ' | ' | ' | ' | ' | ' | ' | 25,813,075 | ' | ' | ' |
Purchase price per share | ' | ' | ' | ' | ' | ' | ' | ' | $0.50 | ' | ' | ' |
Conversion of outstanding promissory notes held by Ironbound | ' | ' | ' | ' | ' | ' | ' | ' | $300 | ' | ' | ' |
Number of shares repurchased | ' | ' | ' | ' | ' | ' | ' | ' | 381,950 | ' | ' | ' |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Customer [Member] | Accounts receivable [Member] | ' | ' | ' | ' |
Summary of Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Concentration risk description | '16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | '30.5%, 21.9% and 19.0% of accounts receivable, or 71.4% of accounts receivable in the aggregate | '16.8% and 16.2% of accounts receivable, or 33.0% of accounts receivable in the aggregate | '30.5% and 19.0% of accounts receivable, or 49.5% of accounts receivable in the aggregate |
Vendor [Member] | Accounts payable [Member] | ' | ' | ' | ' |
Summary of Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Concentration risk description | '32.8% and 14.7% of accounts payable, or 47.5% of accounts payable in the aggregate | '39.7% of accounts payable from one vendor | '32.8% and 14.7% of accounts payable, or 47.5% related to accounts payable in the aggregate | '39.7% accounts payable from one vendor |
Vendor [Member] | Cost of revenues [Member] | ' | ' | ' | ' |
Summary of Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Concentration risk description | '30.4%, 24.6% and 19.1% of cost of revenues, or 74.1% of cost of revenues in the aggregate | '50.1% of cost of revenues from one vendor | '23.2%, 19.1%, 18.3% and 12.7% of cost of revenues, or 73.3% of cost of revenues in the aggregate | '31.6%, 12.5% of cost of revenues, or 44.1% of cost of revenues in the aggregate |
Revenue [Member] | Customer [Member] | ' | ' | ' | ' |
Summary of Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Concentration risk description | '20.9% and 14.8% of revenue, or 35.7% of revenue in the aggregate | '26.5%, 22.7% and 19.2% of revenue, or 68.4% of revenue in the aggregate | '18.7%, 10.7% and 10.1% of revenue, or 39.5% of revenue in the aggregate | '26.0% and 15.8% of revenue, or 41.8% of revenue in the aggregate |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) | 9 Months Ended |
Sep. 30, 2014 | |
09/01/13 to 02/28/14 | ' |
Schedule Of Royalty Revenue [Line Items] | ' |
Royalty Rate Applied to Revenues | 5.00% |
03/01/14 to 8/31/14 | ' |
Schedule Of Royalty Revenue [Line Items] | ' |
Royalty Rate Applied to Revenues | 15.00% |
09/01/14 to 02/28/15 | ' |
Schedule Of Royalty Revenue [Line Items] | ' |
Royalty Rate Applied to Revenues | 20.00% |
03/01/15 to 09/15/17 | ' |
Schedule Of Royalty Revenue [Line Items] | ' |
Royalty Rate Applied to Revenues | 25.00% |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | ' | ' |
Fair value of assets that measured on a recurring basis | $224 | $224 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) [Member] | ' | ' |
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | ' | ' |
Fair value of assets that measured on a recurring basis | ' | ' |
Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) | ' | ' |
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | ' | ' |
Fair value of assets that measured on a recurring basis | ' | ' |
Significant Unobservable Inputs (Level 3) | ' | ' |
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | ' | ' |
Fair value of assets that measured on a recurring basis | $224 | $224 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 3) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Beginning balance | $224 |
Acquisition of contingent consideration associated with the Health Guru Media merger | ' |
Ending balance | $224 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 4) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Summary of Significant Accounting Policies [Abstract] | ' | ' | ' | ' |
Weighted average number of shares outstanding, basic | 95,884,241 | 59,011,675 | 90,383,076 | 33,146,792 |
Effect of dilutive securities, common share equivalents | ' | 787,229 | ' | 262,409 |
Weighted average number of shares outstanding, diluted | 95,884,241 | 59,798,904 | 90,383,076 | 33,409,201 |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' |
Cash, FDIC Insured Amount | $250 | ' | $250 | ' |
Royalty expense | ' | ' | $2,000 | ' |
Royalty settlement description | ' | ' | ' | ' |
An amount representing $2,000 less the aggregate amount of the Skyword Royalty paid through such fifth year is deemed the “Remainder.” If (i) the Remainder is $0, then no further action is necessary, (ii) if the Remainder is greater than $0, then Health Guru Media may pay the full dollar value of the Remainder to Skyword in full satisfaction of the obligation, or, (iii) if Health Guru Media does not exercise its option to pay the remainder in full, then Health Guru Media shall select a dollar value between $0 and the Remainder (“Settlement Value”). Skyword then has the option to accept receipt of the Settlement Value in full satisfaction or (iv) Skyword pays Health Guru Media the Settlement Value and thus reclaims all assets of the Gather business. | ||||
Discount rate | ' | ' | 35.00% | ' |
Antidilutive securities excluded from computation of earnings per share | 8,870,000 | 2,425,000 | 8,870,000 | 2,425,000 |
Warrants excluded from the computation of earnings per share | 6,363,636 | ' | 6,363,636 | ' |
Short_Term_Debt_Details
Short Term Debt (Details) (USD $) | 0 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | ||
In Thousands, unless otherwise specified | Nov. 01, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 10, 2011 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jun. 10, 2011 | Jun. 10, 2011 |
Health Guru Media [Member] | Health Guru Media [Member] | Health Guru Media [Member] | Health Guru Media [Member] | Health Guru Media [Member] | Health Guru Media [Member] | ||||
First Tranche [Member] | Second Tranche [Member] | ||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument term | '3 years | ' | ' | ' | ' | '1 year | ' | ' | ' |
Line of credit facility | $5,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Increase line of credit facility | 10,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowing capital description | 'The Borrowing Base is equal to 85% of eligible accounts receivable plus the lesser of 75% of eligible unbilled accounts receivable or $500 less reserves established by Lender from time to time less $500. Kitara Media shall maintain at all times minimum excess availability of not less than $500. The credit line terminates on November 1, 2016, at which time all amounts outstanding must be paid. | ' | ' | ' | ' | 'Health Guru Media presented invoices to the Bank who then advanced it up to 60% of eligible invoices and could remain outstanding for up to 120 days of the invoice date or 60 days past due. | ' | ' | ' |
Short term debt, amount | ' | 1,876 | 3,304 | 3,000 | ' | ' | ' | 2,000 | 1,000 |
Interest rate of credit facility | 4.25% | 13.00% | ' | ' | ' | ' | ' | ' | ' |
Interest charge | 10 | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum maintain creditt facility | 1,500 | ' | ' | ' | ' | ' | ' | ' | ' |
Short term debt outstanding | ' | 1,628 | 841 | 500 | 247 | ' | 1,383 | ' | ' |
Capital expenditures | 100 | ' | ' | ' | ' | ' | ' | ' | ' |
Due date of notes payable | 30-Apr-15 | ' | ' | ' | ' | ' | ' | 1-Oct-14 | 1-Dec-14 |
Capitalized software development costs | 1,200 | 1,000 | ' | ' | ' | ' | ' | ' | ' |
Financing Receivable, Net | ' | ' | ' | ' | 0 | ' | 1,080 | ' | ' |
Debt Instrument, Interest Rate Terms | ' | ' | ' | ' | ' | 'All debits in the account bore interest daily at a rate equal to 1.75% above prime rate as published in the Wall Street Journal. | 'Interest is payable monthly at an annual interest rate which is a sum of the prime rate, as published by The Wall Street Journal, plus 9.75% per annum (the "Combined Interest Rate"). | ' | ' |
Bank Charge Commission Rate | ' | ' | ' | ' | ' | 0.35% | ' | ' | ' |
Debt Instrument, Face Amount | 2,500 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument gross proceeds | ' | $1,000 | ' | ' | ' | ' | ' | ' | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies [Abstract] | ' |
2014 (three months) | ' |
2015 | 217 |
2016 | 261 |
2017 | 265 |
2018 | 276 |
Thereafter | 346 |
Total | $1,365 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Commitments and Contingencies (Textual) | ' | ' | ' | ' | ' |
Rent expense | $88 | $57 | $409 | $163 | ' |
Lease expiration date | ' | ' | 29-Sep-14 | ' | ' |
Agreement termination fee | ' | ' | 50 | ' | ' |
Junior secured promissory note, Original principal amount | ' | ' | ' | ' | 28,700 |
Monthly rent | ' | ' | 22 | ' | ' |
operating lease description | ' | ' | ' | ' | ' |
The new lease, which commenced on September 30, 2014, is for a total of 10,000 square feet of space and has an initial lease term of 66 months with the Company occupying the initial 7,500 square feet of space on September 30, 2014 at a monthly rent of $22 with a plan to occupy the remaining 2,500 square feet of space approximately on January 1, 2015. | |||||
Additional rent | ' | ' | $8 | ' | ' |
Health Guru Media [Member] | ' | ' | ' | ' | ' |
Commitments and Contingencies (Textual) | ' | ' | ' | ' | ' |
Lease expiration date | ' | ' | 30-Sep-15 | ' | ' |
Stockbased_Compensation_Detail
Stock-based Compensation (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Summary of employee and non-employee stock options outstanding | ' | ' |
Weighted Average Contractual Life, Outstanding Ending | '5 years | ' |
Stock Options [Member] | ' | ' |
Summary of employee and non-employee stock options outstanding | ' | ' |
Stock Options Outstanding, Beginning Balance | 9,150,000 | ' |
Stock options, granted | 1,420,000 | ' |
Stock Options, Exercised | ' | ' |
Stock Options, Forfeited, expired or cancelled | -1,700,000 | ' |
Stock Options Outstanding, Ending Balance | 8,870,000 | 9,150,000 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $0.31 | ' |
Weighted Average Exercise Price, Granted | $0.34 | ' |
Weighted Average Exercise Price, Exercised | ' | ' |
Weighted Average Exercise Price, Forfeited, expired or cancelled | $0.31 | ' |
Weighted-Average Exercise Price, Outstanding, Ending Balance | $0.31 | $0.31 |
Weighted Average Grant Date Fair Value, Outstanding Beginning Balance | $0.13 | ' |
Weighted average grant date fair value of options granted | $0.40 | ' |
Weighted Average Grant Date Fair Value, Exercised | ' | ' |
Weighted Average Grant Date Fair Value, Forfeited, expired or canceled | $0.22 | ' |
Weighted Average Grant Date Fair Value, Outstanding Ending Balance | $0.15 | $0.13 |
Weighted Average Contractual Life, Outstanding Beginning | '4 years 7 months 6 days | '4 years 8 months 12 days |
Weighted Average Contractual Life, Outstanding Ending | '4 years | ' |
Aggregate intrinsic value, Beginning Balance | $10,013 | ' |
Aggregate intrinsic value, Ending Balance | 3,198 | 10,013 |
Stock Options, Exercisable | 212,500 | ' |
Exercisable, Vested | 2,162,522 | ' |
Exercisable, Exercised | ' | ' |
Forfeited, expired or canceled | ' | ' |
Stock Options, Exercisable | 2,375,022 | 212,500 |
Weighted Average Exercise Price, Beginning | $0.24 | ' |
Weighted Average Exercise Price, Vested | $0.41 | ' |
Weighted Average Exercise Price, Exercised | ' | ' |
Weighted Average Excercise Price Forfeited, expired or canceled | ' | ' |
Weighted Average Exercise Price, Ending | $0.40 | $0.24 |
Weighted Average Grant Date Fair Value, Exercisable, Beginning | $0.10 | ' |
Weighted Average Grant Date Fair Value, Vested | $0.17 | ' |
Weighted Average Grant Date Fair Value, Exercised | ' | ' |
Weighted Average Grant Date Fair Value Forfeited, expired or canceled | ' | ' |
Weighted Average Grant Date Fair Value, Exercisable, Ending | $0.17 | $0.10 |
Weighted Average Remaining Contractual Term,Opening | '4 years 6 months | ' |
Weighted Average Remaining Contractual Term,Ending | '4 years 1 month 6 days | ' |
Exercisable, Intrinsic Value, Beginning Balance | 245 | ' |
Exercisable, Intrinsic Value, Ending Balance | $652 | $245 |
Stockbased_Compensation_Detail1
Stock-based Compensation (Details 1) (USD $) | 0 Months Ended |
In Thousands, except Share data, unless otherwise specified | 8-May-14 |
Option Grants [Member] | ' |
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model | ' |
Exercise Price | $0.04 |
Stock Price | $0.60 |
Number of shares | 670,000 |
Dividend Yield | $0 |
Expected Volatility | 55.00% |
Risk-free interest rate | 1.63% |
Expected Life | '3 years 9 months |
Non- Plan Option Grant [Member] | ' |
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model | ' |
Exercise Price | $0.60 |
Stock Price | $0.60 |
Number of shares | 750,000 |
Dividend Yield | $0 |
Expected Volatility | 55.00% |
Risk-free interest rate | 1.63% |
Expected Life | '5 years |
Stockbased_Compensation_Detail2
Stock-based Compensation (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Stock Option Plan (Textual) | ' | ' | ' | ' |
Stock based compensation expense | $68 | ' | $381 | $34 |
Unamortized value of options | ' | ' | $883 | ' |
Weighted average remaining amortization period | ' | ' | '3 years 1 month 6 days | ' |
Vesting term | ' | ' | '3 years | ' |
Contractual term | ' | ' | '5 years | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Related Party Transactions Textual [Abstract] | ' | ' | ' | ' |
Related party expenses | ' | $96 | ' | $250 |
Acquisition_Details
Acquisition (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Acquisition [Abstract] | ' | ' |
Revenue | $9,533 | $24,695 |
Net (Loss) | ($445) | ($2,733) |
Net (Loss) per Common Share - Basic and Diluted | ($0.01) | ($0.03) |
Weighted-Average Number of shares outstanding - Basic and Diluted | 83,156,969 | 83,156,969 |
Acquisition_Details_Textual
Acquisition (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jul. 01, 2013 | Dec. 03, 2013 |
New York Publishing Group Inc [Member] | Health Guru Media [Member] | |||||
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' | ' | ' |
Business acquistion shares issued | ' | ' | ' | ' | 10,000,000 | 18,000,000 |
Business acquisition value of shares | ' | ' | ' | ' | $2,000 | $8,600 |
Business acquisition, description | ' | ' | ' | ' | ' | ' |
(a) an aggregate of 10,000,000 shares of the Company’s common stock and (b) the Closing Notes, one in the amount of $100 which was due and payable on January 1, 2014 (which was subsequently extended through January 1, 2015) and one in the amount of $200 being due and payable on January 1, 2023 to replace the existing advances from the stockholder of NYPG. Each of the Closing Notes accrues interest at a rate of 1% per annum, which will be due at the time the Closing Notes become due and payable. | ||||||
Revenue | 4,333 | 6,586 | 16,508 | 17,013 | ' | ' |
Net Loss | ($1,798) | $175 | ($7,774) | $295 | ' | ' |
Subsequent_Event_Details
Subsequent Event (Details) (Subsequent Event [Member], USD $) | 0 Months Ended | |
In Thousands, unless otherwise specified | Oct. 14, 2014 | Oct. 10, 2014 |
Subsequent Event Textual [Abstract] | ' | ' |
Financing of debt to Holdco | ' | $96,000 |
Debt facility | ' | 81,000 |
Closing capacity | ' | 7,500 |
Interest rate description | ' | ' |
LIBOR (but no less than 1% and no more than 3%) plus 6% in the case of the revolving facility and 9% in the case of the term facility. | ||
Interest payable | ' | 7,000 |
Deferred fee | ' | 12,500 |
Subsequent event, description | ' | ' |
(i) the Company will pay Mr. Silberstein a bonus equal to three months of his base salary. The Company will engage Mr. Silberstein as a consultant for nine months for a monthly fee of approximately $30, subject to adjustment in certain circumstances, and (iii) at the effective time of his resignation, Mr. Silberstein's outstanding employee stock options, pursuant to which he has the right to purchase 2,500,000 shares of Kitara Common Stock, will be amended so that they survive his resignation and 250,000 of the unvested shares vest immediately, with the remainder vesting upon the achievement of certain business and financial performance goals. | ||
(iii) the right to receive performance-based EBITDA “earn out” payments that would enable the Transferors to receive up to an additional $40,000 in cash or stock consideration during the 2015 to 2018 fiscal years; (iv) on or prior to June 30, 2016, $10,000 in cash and/or shares of Holdco Common Stock; and (v) on or about the fourth anniversary of the Closing, $6,000 in cash. | ||
Merger transactions | ' | 100.00% |
Percentage of common stock fully diluted shares of Holdco | ' | 53.00% |
Transaction in cash | ' | 80,000 |
Revolving Facility [Member] | ' | ' |
Subsequent Event Textual [Abstract] | ' | ' |
Debt facility | ' | $15,000 |