Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 15-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Snap Interactive, Inc | |
Entity Central Index Key | 1355839 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 39,682,826 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $2,327,806 | $1,138,385 |
Credit card holdback receivable | 215,913 | 648,759 |
Accounts receivable, net of allowances and reserves of $54,256 and $42,533, respectively | 249,518 | 221,128 |
Short term security deposits | 24,956 | 115,104 |
Prepaid expense and other current assets | 109,103 | 93,542 |
Total current assets | 2,927,296 | 2,216,918 |
Fixed assets and intangible assets, net | 442,868 | 563,123 |
Notes receivable | 79,154 | 78,520 |
Long term security deposits | 335,659 | 135,000 |
Investments | 200,000 | 200,000 |
Total assets | 3,984,977 | 3,193,561 |
Current liabilities: | ||
Accounts payable | 1,109,319 | 1,074,345 |
Accrued expenses and other current liabilities | 350,767 | 1,062,836 |
Notes payable | 400,000 | |
Deferred subscription revenue | 1,980,331 | 1,952,075 |
Deferred advertising revenue | 20,786 | 13,427 |
Total current liabilities | 3,461,203 | 4,502,683 |
Convertible note payable, net of discount | 719,572 | |
Derivative liabilities | 2,113,425 | 23,425 |
Capital lease obligations | 131,695 | 149,055 |
Total liabilities | 6,425,895 | 4,675,163 |
Commitments and Contingencies | ||
Stockholders' equity (deficit): | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding | ||
Common stock, $0.001 par value, 100,000,000 shares authorized, 50,007,826 and 49,507,826 shares issued, respectively, and 39,682,826 and 39,182,826 shares outstanding, respectively | 39,683 | 39,183 |
Additional paid-in capital | 12,117,852 | 11,858,489 |
Accumulated deficit | -14,598,453 | -13,379,274 |
Total stockholders' equity (deficit) | -2,440,918 | -1,481,602 |
Total liabilities and stockholders' equity (deficit) | $3,984,977 | $3,193,561 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Balance Sheets [Abstract] | ||
Allowances and reserves on Accounts receivables | $54,256 | $42,533 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 50,007,826 | 49,507,826 |
Common stock, shares outstanding | 39,682,826 | 39,182,826 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues: | ||
Subscription revenue | $3,129,310 | $3,139,020 |
Advertising revenue | 56,773 | 153,333 |
Total revenues | 3,186,083 | 3,292,353 |
Costs and expenses: | ||
Programming, hosting and technology expense | 526,947 | 942,411 |
Compensation expense | 736,580 | 769,403 |
Professional fees | 234,633 | 250,155 |
Advertising and marketing expense | 1,726,097 | 1,472,210 |
General and administrative expense | 944,601 | 863,417 |
Total costs and expenses | 4,168,858 | 4,297,596 |
Loss from operations | -982,775 | -1,005,243 |
Interest (expense) income, net | -236,404 | 1,874 |
Change in fair value of derivative liabilities | 70,275 | |
Loss before provision for income taxes | -1,219,179 | -933,094 |
Provision for income taxes | ||
Net loss | ($1,219,179) | ($933,094) |
Net loss per share of common stock: | ||
Basic and diluted | ($0.03) | ($0.02) |
Weighted average number of shares of common stock used in calculating net loss per share of common stock: | ||
Basic and diluted | 39,413,824 | 39,142,548 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) (USD $) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance at Dec. 31, 2014 | ($1,481,602) | $39,183 | $11,858,489 | ($13,379,274) |
Balance, shares at Dec. 31, 2014 | 39,182,826 | |||
Common stock issued in connection with Securities Purchase Agreement | 350 | -350 | ||
Common stock issued in connection with Securities Purchase Agreement, shares | 350,000 | |||
Common stock issued in connection with Advisory Services Agreement | 30,000 | 150 | 29,850 | |
Common stock issued in connection with Advisory Services Agreement, shares | 150,000 | |||
Stock-based compensation expense for restricted stock awards | 205,771 | 205,771 | ||
Stock-based compensation expense for stock options | 24,092 | 24,092 | ||
Net loss | -1,219,179 | -1,219,179 | ||
Balance at Mar. 31, 2015 | ($2,440,918) | $39,683 | $12,117,852 | ($14,598,453) |
Balance, shares at Mar. 31, 2015 | 39,682,826 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | ($1,219,179) | ($933,094) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 60,819 | 43,263 |
Lease obligation interest expense | 7,778 | |
Stock-based compensation expense | 229,863 | 222,476 |
Loss on disposal of fixed assets | 79,628 | |
Amortization of debt issuance cost | 21,023 | |
Amortization of debt discount | 133,589 | |
Change in fair value of derivative liabilities | -70,275 | |
Changes in operating assets and liabilities: | ||
Restricted cash | 104,988 | |
Credit card holdback receivable | 432,846 | -78,049 |
Accounts receivable | -28,390 | 63,518 |
Security deposits | -110,511 | |
Prepaid expenses and other current assets | -16,352 | 39,089 |
Accounts payable, accrued expenses and other current liabilities | -683,598 | 46,002 |
Deferred rent | 4,099 | -10,243 |
Deferred subscription revenue | 28,256 | 261,138 |
Deferred advertising revenue | 7,359 | -153,333 |
Net cash used in operating activities | -1,052,770 | -464,520 |
Cash flows from investing activities: | ||
Purchase of property and equipment | -26,192 | -3,730 |
Proceeds from sale of fixed assets | 6,000 | |
Purchase of non-marketable equity securities | -25,000 | |
Issuance of notes receivable issued to employees and accrued interest | -634 | -1,233 |
Net cash used in investing activities | -20,826 | -29,963 |
Cash flows from financing activities: | ||
Payments of capital lease obligations | -22,734 | |
Repayment of promissory notes | -400,000 | |
Payment of financing costs | -314,249 | |
Proceeds received under Securities Purchase Agreement | 3,000,000 | |
Net cash provided by financing activities | 2,263,017 | |
Net increase (decrease) in cash and cash equivalents | 1,189,421 | -494,483 |
Balance of cash and cash equivalents at beginning of period | 1,138,385 | 927,352 |
Balance of cash and cash equivalents at end of period | 2,327,806 | 432,869 |
Non-cash investing and financing activities: | ||
Compound embedded derivative under the Note and Securities Purchase Agreement recorded as derivative liabilities (See Note 5) | 1,748,000 | |
Warrants issued under the Advisory Services Agreement as additional consideration for the Note and recorded as derivative liabilities (See Note 5) | 342,000 | |
Common stock issued under the Advisory Services Agreement as additional consideration for the Note | $30,000 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Organization and Basis of Presentation [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements include Snap Interactive, Inc. and its wholly owned subsidiary, Snap Mobile Limited (collectively, the “Company”). The Company was organized to operate an online dating application and stand-alone website. The condensed consolidated financial statements included in this report have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. The Company has not included certain information normally included in annual financial statements pursuant to those rules and regulations, although it believes that the disclosure included herein is adequate to make the information presented not misleading. | |
The financial statements contained herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “Form 10-K”), filed with the SEC on March 5, 2015. | |
In the opinion of management, the accompanying unaudited condensed consolidated financial information contains all normal and recurring adjustments necessary to fairly present the condensed consolidated financial condition, results of operations, cash flows and changes in the stockholders’ equity (deficit) of the Company for the interim periods presented. The Company’s historical results are not necessarily indicative of future operating results and the results for the three months ended March 31, 2015 are not necessarily indicative of results for the year ending December 31, 2015, or for any other period. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies |
During the three months ended March 31, 2015, there were no material changes to the Company’s significant accounting policies from those disclosed in the Form 10-K, except for the following: | |
Significant Estimates and Judgments | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the provision for future credit card chargebacks and subscription revenue refunds, estimates used to determine the fair value of our common stock, stock options, non-cash capital stock issuances, stock-based compensation, derivative instruments, debt discounts, conversion features and common stock warrants, collectability of our accounts receivable and the valuation allowance on deferred tax assets. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. We base estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates. | |
Convertible Instruments | |
The Company evaluates and bifurcates conversion features from the instruments containing such features and accounts for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the underlying instrument, (b) the hybrid instrument that contains both the embedded derivative instrument and the underlying instrument is not re-measured at fair value under otherwise applicable GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the underlying instrument is deemed to be conventional as that term is described under applicable GAAP. | |
Common Stock Purchase Warrants and Other Derivative Financial Instruments | |
The Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or net-share settlement in common stock or (ii) give the Company a choice of net-cash settlement or settlement in common stock (physical settlement or net-share settlement). The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in common stock (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that certain freestanding derivatives, including the conversion feature embedded in the 12% Senior Secured Convertible Note (the “Note”) and warrants issued under the Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of February 13, 2015, by and between the Company and Sigma Opportunity Fund II, LLC (“Sigma II”), contained reset provisions and have been classified as derivative liabilities as more fully described in Note 5. | |
Recently Issued Accounting Pronouncements | |
In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This standard amends the existing guidance to require that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability instead of as a deferred charge. ASU 2015-03 is effective on a retrospective basis for annual and interim reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company has elected to early-adopt ASU 2015-03 in connection with the issuance of these condensed consolidated financial statements and as a result, recorded the $314,249 of offering costs incurred in connection with the issuance of the Note (as defined in Note 10) as a debt discount on the date the Note was issued. |
Accounts_Receivable_Net
Accounts Receivable, Net | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounts Receivable, Net [Abstract] | |||||||||
Accounts Receivable, Net | 3. Accounts Receivable, Net | ||||||||
Accounts receivable, net consisted of the following as of March 31, 2015 and December 31, 2014: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(Unaudited) | |||||||||
Accounts receivable | $ | 303,774 | $ | 263,661 | |||||
Less: Reserve for future chargebacks | (54,256 | ) | (42,533 | ) | |||||
Total accounts receivable, net | $ | 249,518 | $ | 221,128 | |||||
Credit card payments for subscriptions and micro-transactions typically settle several days after the date of purchase. The amount of unsettled transactions due from credit card payment processors was $152,859 as of March 31, 2015, as compared to $135,535 at December 31, 2014. The amount of accounts receivable due from Apple Inc. was $122,624, or 49.1% of the Company’s accounts receivable, as of March 31, 2015, compared to $116,427, or 52.6% of the Company’s accounts receivable, at December 31, 2014. |
Security_Deposits
Security Deposits | 3 Months Ended |
Mar. 31, 2015 | |
Security Deposits [Abstract] | |
Security Deposits | 4. Security Deposits |
During 2014, the Company issued a security deposit which replaced the previous letter of credit for the office space lease to be released in May 2015. The Company recorded $115,104 in short term security deposits on its Condensed Consolidated Balance Sheet as of December 31, 2014. For the three months ended March 31, 2015, rent monthly payments and taxes were applied against the security deposit. The Company recorded $24,956 in short-term security deposits on its Condensed Consolidated Balance Sheet as of March 31, 2015. | |
In October 2014, the Company issued a $135,000 security deposit which replaced the previous letter of credit as part of the new capital lease obligations for equipment with Hewlett Packard Financial Services Company (“HP”). The Company recorded $135,000 under long-term security deposits on its Condensed Consolidated Balance Sheet as of March 31, 2015 and December 31, 2014. | |
In February 2015, the Company issued $200,659 as a security deposit as part of the new office rent lease (see Note 14). The Company recorded the $200,659 under long-term security deposits on its Condensed Consolidated Balance Sheet as of March 31, 2015. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||
Fair Value Measurements | 5. Fair Value Measurements | ||||||||||||||||
The fair value framework under the Financial Accounting Standards Board’s guidance requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows: | |||||||||||||||||
● | Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities; | ||||||||||||||||
● | Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and | ||||||||||||||||
● | Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability. | ||||||||||||||||
The following table summarizes the liabilities measured at fair value on a recurring basis as of March 31, 2015: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
LIABILITIES: | |||||||||||||||||
Warrant liabilities | $ | - | $ | - | $ | 1,163,425 | 1,163,425 | ||||||||||
Compound embedded derivative | - | - | 950,000 | 910,000 | |||||||||||||
Total derivative liabilities | $ | - | $ | - | $ | 2,113,425 | $ | 2,113,425 | |||||||||
The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2014: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
LIABILITIES: | |||||||||||||||||
Warrant liability | $ | - | $ | - | $ | 23,425 | $ | 23,425 | |||||||||
Total derivative liability | $ | - | $ | - | $ | 23,425 | $ | 23,425 | |||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, who report to the Chief Financial Officer, determine 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 accounting and finance department and are approved by the Chief Financial Officer. | |||||||||||||||||
Level 3 Valuation Techniques: | |||||||||||||||||
Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. | |||||||||||||||||
The Company deems financial instruments which do not have fixed settlement provisions to be derivative instruments. The common stock purchase warrants and the conversion feature embedded in the Note do not have fixed settlement provisions because their exercise prices may be lowered if the Company issues securities at a lower price in the future. In addition, the Company issued warrants to purchase common stock in January 2011 in conjunction with an equity financing. In accordance with Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity, the fair value of these warrants is classified as a liability on the Company’s Condensed Consolidated Balance Sheets because, according to the terms of the warrants, a fundamental transaction could give rise to an obligation of the Company to pay cash to its warrant holders. In addition, the Company entered into an Advisory Services Agreement (the “Advisory Agreement”), dated as of February 13, 2015, by and between the Company and Sigma Capital Advisors, LLC (“Sigma”) that contains certain provisions whereby the Company will be required to make certain make-whole cash payments to the holder of its outstanding convertible note payable upon the occurrence of certain future events, as more fully described in Note 10. Such instruments do not have fixed settlement provisions and have also been recorded as derivative liabilities. Corresponding changes in the fair value of the derivative liabilities are recognized in earnings on the Company’s Condensed Consolidated Statement of Operations in each subsequent period. | |||||||||||||||||
The Company’s derivative liabilities are carried at fair value and were classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs. In order to calculate fair value, the Company uses a custom model developed with the assistance of an independent third-party valuation expert. This model calculates the fair value of the warrant derivative liabilities at each measurement date using a Monte-Carlo style simulation, as the value of certain features of the warrant derivative liabilities would not be captured by the standard Black-Scholes model. | |||||||||||||||||
The following table summarizes the values of certain assumptions used by the Company’s custom model to estimate the fair value of the warrant liabilities as of March 31, 2015 and December 31, 2014: | |||||||||||||||||
March 31, | December 31, | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
(Unaudited) | |||||||||||||||||
Stock price | $ | 0.19 | $ | 0.2 | |||||||||||||
Weighted average strike price | $ | 0.64 | $ | 2.5 | |||||||||||||
Remaining contractual term (years) | 1.9 | 1.1 | |||||||||||||||
Volatility | 100 | % | 125.7 | % | |||||||||||||
Risk-free rate | 0.5 | % | 0.3 | % | |||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||
The following table summarizes the values of certain assumptions used by the Company’s custom model to estimate the fair value of the conversion feature liability as of March 31, 2015: | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Stock price | $ | 0.19 | |||||||||||||||
Strike price | $ | 0.2 | |||||||||||||||
Remaining contractual term (years) | 1.9 | ||||||||||||||||
Volatility | 100 | % | |||||||||||||||
Risk-free rate | 0.5 | % | |||||||||||||||
Dividend yield | 0 | % | |||||||||||||||
For the purposes of determining fair value, the Company used “adjusted volatility” in favor of “historical volatility” in its Monte-Carlo style simulation. Historical volatility of the Company was calculated using weekly stock prices over a look back period corresponding to the remaining contractual term of the warrants as of each valuation date. Management considered the lack of marketability of these instruments by incorporating a 10% incremental discount rate through a reduction of the volatility estimate (also known as volatility haircut) to calculate the adjusted volatility as of each valuation date. | |||||||||||||||||
The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis: | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Beginning balance | $ | 23,425 | $ | 140,550 | |||||||||||||
Fair value of derivatives issued | 2,090,000 | - | |||||||||||||||
Change in fair value of derivative liabilities | - | (117,125 | ) | ||||||||||||||
Ending balance | $ | 2,113,425 | $ | 23,425 | |||||||||||||
The Company determined that the change in fair value of its derivative liabilities for the three months ended March 31, 2015 was not material. |
Fixed_Assets_and_Intangible_As
Fixed Assets and Intangible Assets, Net | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Fixed Assets and Intangible Assets, Net [Abstract] | |||||||||
Fixed Assets and Intangible Assets, Net | 6. Fixed Assets and Intangible Assets, Net | ||||||||
Fixed assets and intangible assets, net consisted of the following at March 31, 2015 and December 31, 2014: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(Unaudited) | |||||||||
Computer equipment | $ | 226,419 | $ | 256,610 | |||||
Furniture and fixtures | 95,785 | 142,856 | |||||||
Leasehold improvements | 20,333 | 382,376 | |||||||
Software | 10,968 | 10,968 | |||||||
Website domain name | 124,938 | 124,938 | |||||||
Website costs | 40,500 | 40,500 | |||||||
Equipment under capital leases | 218,605 | 218,605 | |||||||
Total fixed assets | 737,548 | 1,176,853 | |||||||
Less: Accumulated depreciation and amortization | (294,680 | ) | (613,730 | ) | |||||
Total fixed assets and intangible assets, net | $ | 442,868 | $ | 563,123 | |||||
Depreciation and amortization expense for the three months ended March 31, 2015 was $60,819, as compared to $43,263 for the three months ended March 31, 2014. The Company only holds fixed assets in the United States. | |||||||||
During March 2015, the Company disposed of fixed assets, primarily consisting of leasehold improvements and furniture and fixtures, in connection with the relocation of the Company’s corporate headquarters. The net loss on the disposal of the fixed assets for the period ended March 31, 2015 was $79,628. |
Notes_Receivable
Notes Receivable | 3 Months Ended |
Mar. 31, 2015 | |
Accounts Receivable, Net [Abstract] | |
Notes Receivable | 7. Notes Receivable |
At March 31, 2015, the Company had notes receivable due in the aggregate amount of $79,154 from two former employees. The employees issued the notes to the Company since the Company paid taxes for stock-based compensation on these employees’ behalf in 2011 and 2012. The outstanding amounts under the notes are secured by pledged stock certificates and are due at various times during 2021-2023. Interest accrues on these notes at rates ranging from 2.80% to 3.57% per annum. | |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | 8. Income Taxes |
The Company had no income tax benefit or provision for the three months ended March 31, 2015 and 2014. Since the Company incurred a net loss for the three months ended March 31, 2015 and 2014, there was no income tax expense for either period. Increases in deferred tax balances have been offset by a valuation allowance and have no impact on the Company’s deferred income tax provision. | |
In calculating the provision for income taxes on an interim basis, the Company estimates the annual effective income tax rate based upon the facts and circumstances known for the period and applies that rate to the earnings or losses for the most recent interim period. The Company’s effective income tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement income and tax return income applicable to the Company in the various jurisdictions in which the Company operates. The effect of a discrete item, such as changes in estimates, changes in enacted tax laws or rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the result of new judicial interpretations or changes in tax laws or regulations. |
Accrued_Expenses_and_Other_Cur
Accrued Expenses and Other Current Liabilities | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accrued Expenses and Other Current Liabilities [Abstract] | |||||||||
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities | ||||||||
Accrued expenses and other current liabilities consisted of the following at March 31, 2015 and December 31, 2014: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(Unaudited) | |||||||||
Compensation and benefits | $ | 101,687 | $ | 360,515 | |||||
Deferred rent | 14,976 | 10,877 | |||||||
Professional fees | 43,125 | 254,807 | |||||||
Repayment of advertising agreement advance | 83,891 | 329,165 | |||||||
Other accrued expenses | 107,088 | 107,472 | |||||||
Total accrued expenses and other current liabilities | $ | 350,767 | $ | 1,062,836 |
Notes_and_Convertible_Note_Pay
Notes and Convertible Note Payable | 3 Months Ended |
Mar. 31, 2015 | |
Notes and Convertible Note Payable [Abstract] | |
Notes and Convertible Note Payable | 10. Notes and Convertible Note Payable |
Notes Payable | |
On April 24, 2014, the Company issued a promissory note in the amount of $300,000 to a related party, Clifford Lerner, the Company’s president, chief executive officer and the chairman of the Company’s Board of Directors. The promissory note was originally due and payable on January 24, 2015, but was subsequently amended to extend its maturity for an additional nine months and was due and payable on October 24, 2015 and bore interest at the rate of nine percent (9%) per annum. On March 25, 2015, the promissory note was repaid in full (see Note 16). | |
On May 20, 2014, the Company issued a promissory note in the amount of $100,000 and a warrant to purchase 25,000 shares of its common stock to Thomas Carrella. The promissory note was due and payable on February 20, 2015 and bore interest at the rate of fifteen percent (15%) per annum. The Company calculated the fair value of the warrant using Black-Scholes option pricing model and recorded $4,750 of deferred financing costs related to the issuance of the warrant that were amortized over the term of the promissory note. On February 20, 2015, the promissory note was repaid in full. | |
Securities Purchase Agreement | |
On February 13, 2015, the Company closed a private placement of debt and equity securities for aggregate gross proceeds of $3,000,000. In connection with the Securities Purchase Agreement, the Company issued Sigma II (i) 350,000 shares of the Company’s common stock, (ii) the Note in the aggregate principal amount of $3,000,000 and (iii) a warrant to purchase up to 10,500,000 shares of the Company’s common stock. The Company incurred financing costs of $314,249 in connection with the Securities Purchase Agreement that will be amortized over the term of the Note. | |
The Note bears interest at a rate of 12% per annum and matures on the earlier of February 13, 2017 or a change in control. During any time while the Note is outstanding, the outstanding principal balance of the Note, together with all accrued and unpaid interest, is convertible into shares of the Company’s common stock at the option of Sigma II at a conversion price of $0.20 per share, subject to certain adjustments, including reset adjustments to the conversion price if the Company issues securities at lower prices in the future, as disclosed in Note 5. The Company’s obligations under the Note are secured by a first priority lien on all of its assets and property. The Note is also secured by up to 65% of the outstanding capital stock and other equity interests of Snap Mobile Limited, the Company’s wholly owned subsidiary. Snap Mobile Limited is also a guarantor of the Note. An event of default under the Note includes, among other things, (i) the Company’s failure to pay any amounts due and payable when and as required, (ii) failure of a representation or warranty made by the Company to be correct and accurate when made, (iii) the institution of bankruptcy or similar proceedings against the Company and (iv) the Company’s inability to pay debts as they become due. The Note also requires the Company to maintain an aggregate cash balance of $1,350,000 in its bank accounts or it will be required to make partial prepayments on the Note. If the Company fails to maintain this aggregate cash balance in its bank accounts for a thirty day period, it is required to make a $125,000 prepayment on the Note. For each subsequent calendar month that the aggregate cash balance in the Company’s bank accounts does not equal or exceed $1,500,000, the Company must make an additional $125,000 prepayment on the Note. | |
The Note contains a compound embedded derivative consisting of an embedded conversion feature and interest make-whole provisions and was accounted for as a derivative liability with an aggregate fair value of $950,000. In addition, the fair value of the warrants was $798,000 and was also required to be accounted for as derivative liabilities. Both instruments were also recorded as debt discounts on the date the Note was issued. The Company is amortizing the debt discount using the effective interest method over the life of the Note, which is two years. Amortization expense for the three months ended March 31, 2015 was $110,148, which is included as interest expense on the accompanying Condensed Consolidated Statement of Operations. Contractual interest expense under the convertible note incurred for the three months ended March 31, 2015 was $46,000. | |
Simultaneously with the closing of the private placement, the Company entered into the Advisory Agreement with Sigma pursuant to which Sigma agreed to provide the Company with certain advisory and consulting services. In connection with the Advisory Agreement, the Company issued Sigma 150,000 shares of the Company’s common stock and a warrant to purchase up to 4,500,000 shares of the Company’s common stock. Both the common shares and the warrant issued were fully vested and non-forfeitable on the date the Advisory Agreement was entered into. Based on the terms of the Advisory Agreement and the criteria outlined in ASC 505-50, Equity-Based Payments to Non-Employees, the Company determined that the common stock and warrants issued were in fact additional consideration provided to Sigma in connection with the issuance of the Note. As a result, the Company recorded the grant date fair value of the common stock and warrants of $30,000 and $342,000, respectively, as debt discounts on the accompanying Condensed Consolidated Balance Sheet. Amortization expense for the three months ended March 31, 2015 was $23,441, which is included as interest expense on the accompanying Condensed Consolidated Statement of Operations. | |
In addition to the issuance of common stock and warrants under the Advisory Agreement, the Company also agreed to pay Sigma a monthly advisory fee of $10,000, up to an aggregate limit of $240,000, subject to certain exceptions, over the life of the Note (the “Cash Payment”). If the Company were to prepay the Note or the repayment of the Note was accelerated for certain reasons, the Company would still be required to remit either a portion or the full amount of the Cash Payment. The Company also agreed to pay Sigma a cash payment of $150,000 if the Company effectuates a dilutive issuance (as defined) while the Note is outstanding (the “Dilutive Cash Payment”). The Company determined that based on the make-whole features associated with the Cash Payment and the contingent make-whole features associated with the Dilutive Cash Payment, that these payments are required to be treated as derivative instruments in accordance with ASC 815. The value of these instruments was included in the value of the compound embedded derivative discussed above. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation and Common Stock Purchase Warrants [Abstract] | |||||||||
Stock-Based Compensation | 11. Stock-Based Compensation | ||||||||
The Snap Interactive, Inc. Amended and Restated 2011 Long-Term Incentive Plan (the “Plan”) permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, shares of performance stock, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of common stock that may be issued pursuant to awards under the Plan is 7,500,000 shares, 100% of which may be issued pursuant to incentive stock options. As of March 31, 2015, there were 3,517,747 shares available for future issuance under the Plan. | |||||||||
Stock Options | |||||||||
The following table summarizes the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the three months ended March 31, 2015: | |||||||||
Three Months Ended March 31, 2015 | |||||||||
Expected volatility | 179.47 | % | |||||||
Expected life of option | 6.03 | ||||||||
Risk free interest rate | 1.72 | % | |||||||
Expected dividend yield | 0 | % | |||||||
The expected life of the options is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the "simplified" method as prescribed by Staff Accounting Bulletin 110, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the Company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award. | |||||||||
The following table summarizes stock option activity for the three months ended March 31, 2015: | |||||||||
Number of | Weighted | ||||||||
Options | Average | ||||||||
Exercise Price | |||||||||
Stock Options: | |||||||||
Outstanding at December 31, 2014 | 3,808,253 | $ | 0.55 | ||||||
Granted | 398,000 | 0.23 | |||||||
Expired or canceled, during the period | - | - | |||||||
Forfeited, during the period | (199,000 | ) | 0.27 | ||||||
Outstanding at March 31, 2015 | 4,007,253 | 0.53 | |||||||
Exercisable at March 31, 2015 | 2,341,896 | $ | 0.69 | ||||||
At March 31, 2015, the aggregate intrinsic value of stock options that were outstanding and exercisable was $0 and $0, respectively. At March 31, 2014, the aggregate intrinsic value of stock options that were outstanding and exercisable was $20,000 and $0, respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date. The aggregate fair value for the options granted during the three months ended March 31, 2015 was $88,604. | |||||||||
Stock-based compensation expense relating to stock options was $24,092 and $47,654 during the three months ended March 31, 2015 and 2014, respectively. The Company estimates potential forfeitures of stock awards and adjusts recorded stock-based compensation expense accordingly. The estimate of forfeitures is adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock-based compensation expense that is recognized in future periods. | |||||||||
At March 31, 2015, there was $449,891 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.42 years. | |||||||||
Non-employee stock option activity described below is also included in the stock option activity summarized on the previous table. The following table summarizes non-employee stock option activity for the three months ended March 31, 2015: | |||||||||
Number of | Weighted | ||||||||
Options | Average | ||||||||
Exercise Price | |||||||||
Non-Employee Stock Options: | |||||||||
Outstanding at December 31, 2014 | 250,000 | $ | 0.81 | ||||||
Granted | 25,000 | 0.2 | |||||||
Outstanding at March 31, 2015 | 275,000 | 0.75 | |||||||
Exercisable at March 31, 2015 | 250,000 | $ | 0.81 | ||||||
At March 31, 2015 and 2014, the aggregate intrinsic value of non-employee stock options that were outstanding and exercisable was $0 and $0, respectively. | |||||||||
Stock-based compensation expense relating to non-employee stock options was $3,036 and $804 during the three months ended March 31, 2015 and 2014, respectively. The aggregate fair value for the options granted during the three months ended March 31, 2015 was $3,791. | |||||||||
Restricted Stock Awards | |||||||||
The following table summarizes restricted stock award activity for the three months ended March 31, 2015: | |||||||||
Number of | Weighted | ||||||||
RSAs | Average | ||||||||
Grant Date | |||||||||
Fair Value | |||||||||
Restricted Stock Awards: | |||||||||
Outstanding at December 31, 2014 | 10,325,000 | $ | 0.56 | ||||||
Vested | - | - | |||||||
Forfeited, during the period | - | - | |||||||
Outstanding at March 31, 2015 | 10,325,000 | $ | 0.56 | ||||||
At March 31, 2015, there was $3,334,767 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 4.24 years. | |||||||||
Stock-based compensation expense relating to restricted stock awards was $205,771 and $174,822 for the three months ended March 31, 2015 and 2014, respectively. | |||||||||
Non-employee restricted stock award activity described below is also included in total restricted stock award activity summarized on the previous table. The following table summarizes non-employee restricted stock award activity for the three months ended March 31, 2015: | |||||||||
Number of | Weighted | ||||||||
RSAs | Average | ||||||||
Grant Date | |||||||||
Fair Value | |||||||||
Non-Employee Restricted Stock Awards: | |||||||||
Outstanding at December 31, 2014 | 1,075,000 | $ | 0.42 | ||||||
Vested | - | - | |||||||
Outstanding at March 31, 2015 | 1,075,000 | $ | 0.42 | ||||||
At March 31, 2015, there was $164,732 of total unrecognized stock-based compensation expense related to non-employee unvested restricted stock awards, which is expected to be recognized over a weighted average period of 7.24 years. | |||||||||
Stock-based compensation expense relating to non-employee restricted stock awards was ($22,326) and $7,862 for the three months ended March 31, 2015 and 2014, respectively. |
Common_Stock_Warrants
Common Stock Warrants | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation and Common Stock Purchase Warrants [Abstract] | |||||||||
Common Stock Warrants | 12. Common Stock Warrants | ||||||||
Warrant Liability | |||||||||
In January 2011, the Company completed an equity financing that raised gross proceeds of $8,500,000 from the issuance of 4,250,000 shares of common stock at a price of $2.00 per share and warrants to purchase an aggregate of 2,125,000 shares of common stock. The warrants are exercisable any time on or before January 19, 2016 and have an exercise price of $2.50 per share. The Company received $7,915,700 in net proceeds from the equity financing after deducting offering expenses of $584,300. The exercise price of the warrants and number of shares of common stock to be received upon the exercise of the warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions. | |||||||||
The Company also issued warrants to purchase an aggregate of 255,000 shares of its common stock to the Company’s placement agent and advisors in January 2011 in connection with the equity financing as consideration for their services. These warrants have the same terms, including exercise price, registration rights and expiration, as the warrants issued to the investors in the equity financing. | |||||||||
The Company has recorded a derivative liability on its Condensed Consolidated Balance Sheet at the end of each reporting period based on the estimated fair value of the warrants. The warrants are valued at the end of each reporting period with changes recorded as mark-to-market adjustment on derivative liability on the Company’s Condensed Consolidated Statement of Operations. The fair value of these warrants was $23,425 at March 31, 2015 and December 31, 2014, respectively, based on a model developed with the assistance of an independent third-party valuation expert. The gain on change in fair value of warrants on these warrants was $0 and $70,275 for the three months ended March 31, 2015 and March 31, 2014, respectively, and was not presented within loss from operations. | |||||||||
On February 13, 2015, the Company issued a warrant to each of Sigma II and Sigma to purchase up to 10,500,000 shares and 4,500,000 shares, respectively, of the Company’s common stock in connection with the issuance of the Note and the execution of the Advisory Agreement as previously disclosed in Note 10. The warrants were immediately exercisable on February 13, 2015 and expire on the earlier of (a) February 13, 2020 or (b) a change in control. The warrants have an exercise price of $0.35 per share, subject to certain adjustments, including reset adjustments to the exercise price if the Company issues securities at lower prices in the future, as disclosed in Note 5. | |||||||||
The Company has recorded a derivative liability on its Condensed Consolidated Balance Sheet at the end of each reporting period based on the estimated fair value of the warrants. The warrants are valued at the end of each reporting period with changes recorded as mark-to-market adjustment on derivative liability on the Company’s Condensed Consolidated Statement of Operations. The fair value of these warrants was $2,050,000 at March 31, 2015, based on a model developed with the assistance of an independent third-party valuation expert. | |||||||||
Warrant Equity | |||||||||
On May 20, 2014, the Company issued a warrant to purchase 25,000 shares of its common stock to Thomas Carrella in connection with the issuance of a promissory note. The warrant has an exercise price equal to $0.32 per share and, if unexercised, expires on May 20, 2019. | |||||||||
The Company calculated the fair value of the warrant issued to Mr. Carrella using Black-Scholes option pricing model and recorded $4,750 of deferred financing costs related to the issuance of the warrant that was amortized over the term of the promissory note. | |||||||||
The following table summarizes warrant activity for the three months ended March 31, 2015: | |||||||||
Number of | Weighted | ||||||||
Warrants | Average | ||||||||
Exercise Price | |||||||||
Stock Warrants: | |||||||||
Outstanding at December 31, 2014 | 2,367,500 | $ | 2.48 | ||||||
Granted | 15,000,000 | 0.35 | |||||||
Exercised | - | - | |||||||
Forfeited | - | - | |||||||
Outstanding at March 31, 2015 | 17,367,500 | 0.64 | |||||||
Warrants exercisable at March 31, 2015 | 17,367,500 | $ | 0.64 |
Net_Loss_Per_Common_Share
Net Loss Per Common Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Net Loss Per Common Share [Abstract] | |||||||||
Net Loss Per Common Share | 13. Net Loss Per Share of Common Stock | ||||||||
Basic net loss per share of common stock is computed based upon the number of weighted average shares of common stock outstanding as defined by ASC Topic 260, Earnings Per Share. Diluted net loss per share of common stock includes the dilutive effects of stock options, warrants and stock equivalents. To the extent stock options, stock equivalents, shares underlying the convertible note and warrants are antidilutive, they are excluded from the calculation of diluted net loss per share of common stock. For the three months ended March 31, 2015, 46,699,753 shares issuable upon the conversion of the outstanding convertible note payable, the exercise of stock options and warrants, and unvested restricted stock awards were not included in the computation of diluted net loss per share because their inclusion would be antidilutive. For the three months ended March 31, 2014, 16,823,528 shares issuable upon the exercise of stock options and warrants were not included in the computation of diluted net loss per share because their inclusion would have been antidilutive. | |||||||||
The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss per share of common stock: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net loss | $ | (1,219,179 | ) | $ | (933,094 | ) | |||
Denominator: | |||||||||
Basic shares: | |||||||||
Weighted-average number of shares of common stock outstanding | 39,413,824 | 39,142,548 | |||||||
Diluted shares: | |||||||||
Weighted-average number of shares used to compute basic net loss per share of common stock | 39,413,824 | 39,142,548 | |||||||
Weighted-average number of shares used to compute diluted net loss per share of common stock | 39,413,824 | 39,142,548 | |||||||
Net loss per share of common stock: | |||||||||
Basic | $ | (0.03 | ) | $ | (0.02 | ) | |||
Diluted | $ | (0.03 | ) | $ | (0.02 | ) |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2015 | |
Commitments [Abstract] | |
Commitments | 14. Commitments |
Operating Lease Agreements | |
During 2013, the Company entered into a two-year service agreement with Equinix Operating Co., Inc. (“Equinix”) whereby Equinix agreed to provide certain products and services to the Company from January 2013 to January 2015. Pursuant to the service agreement, the Company agreed to pay monthly recurring fees in the amount of $8,450 and certain nonrecurring fees in the amount of $9,700. The agreement automatically renews for additional twelve month terms unless earlier terminated by either party. Hosting expense under this lease totaled $46,549 and $43,791 for the three months ended March 31, 2015 and 2014, respectively. | |
On February 4, 2015, the Company entered into a lease for office space located at 320 West 37th Street, 13th Floor, New York, NY 10018 and paid a security deposit in the amount of $200,659. The term of the lease runs until March 4, 2022. The Company’s monthly office rent payments under the lease will be approximately $25,000 per month for the first year of the term of the lease, which will escalate on an annual basis each year thereafter. Rent expense under this lease for the three months ended March 31, 2015 was $27,517. | |
Capital Lease Agreements | |
In October 2014, two HP lease agreements were canceled due to price negotiations and we entered into two new three-year lease agreements with HP for equipment and certain financed items. In December 2014, we cancelled our remaining operating lease agreements and entered into two additional three-year capital lease agreements with notes. The Company recognized these leases on its Condensed Consolidated Balance Sheets under capitalized lease obligations. Amortization for equipment under capital leases was $18,217 and $0 for the three months ended March 31, 2015 and 2014, respectively. | |
Other Agreements | |
In June 2014, the Company entered into a Membership Acquisition Agreement (the “Acquisition Agreement”) with Zoosk, Inc. (“Zoosk”) whereby it received an upfront payment of $500,000 in two installments in exchange for implementing certain integration features on the Company’s AYI.com website and application that advertise Zoosk during the term of the Acquisition Agreement. The Company was entitled to a payout for each person that registered with Zoosk through the integration features during the term of the Acquisition Agreement. The term of the Acquisition Agreement commenced on August 15, 2014 and ended on November 13, 2014. In 2014, the Company earned $170,835 under the Acquisition Agreement and recorded the remaining amount of $329,165 as advance repayment under accrued expenses and other current liabilities on its Condensed Consolidated Balance Sheet at December 31, 2014. During the three months ended March 31, 2015, the Company repaid $246,874 of the advance repayment. The remaining amount was paid on April 17, 2015. | |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 15. Related Party Transactions |
On January 31, 2013, the Company entered into a subscription agreement with Darrell Lerner and DCL in connection with his separation from the Company. Pursuant to this agreement, the Company purchased (i) 50,000 shares of DCL’s common stock for an aggregate purchase price of $50,000 in April 2013, (ii) 25,000 shares of DCL’s common stock for an aggregate purchase price of $25,000 in July 2013, (iii) 25,000 shares of DCL’s common stock for an aggregate purchase price of $25,000 in October 2013, (iv) 25,000 shares of DCL’s common stock for an aggregate purchase price of $25,000 in January 2014, (v) 25,000 shares of DCL’s common stock for an aggregate purchase price of $25,000 in April 2014, (vi) 25,000 shares of DCL’s common stock for an aggregate price of $25,000 in July 2014 and (vii) 25,000 shares of DCL’s common stock for an aggregate price of $25,000 in September 2014. These nonmarketable securities have been recorded in “Investments” on the Company’s Condensed Consolidated Balance Sheet measured on a cost basis. | |
On January 31, 2013, the Company entered into a consulting agreement with Darrell Lerner, pursuant to which Mr. Lerner agreed to serve as a consultant to the Company for a three-year period, beginning on February 1, 2013 (the “Effective Date”). Pursuant to the agreement, Mr. Lerner agreed to assist and advise the Company on legal, financial and other matters for which he has knowledge that pertains to the Company, as the Company reasonably requests. As compensation for his services, the Company agreed to pay Mr. Lerner a monthly fee of $25,000 for the initial two year period of the agreement and a monthly fee of $5,000 for every month thereafter. The monthly payments under the agreement are conditioned upon Mr. Lerner’s compliance with a customary confidentiality covenant covering certain information concerning the Company, a covenant not to compete during the term of the agreement and for a period of one year following the termination of the agreement, a non-disparagement covenant regarding the Company and a non-solicitation covenant for a period of six months immediately following the later of the termination of the agreement or the end of the term of the agreement. | |
The consulting agreement is for a three-year period; provided, however, that the Company may terminate the agreement at any time without notice and may renew the term of the agreement by providing written notice to Mr. Lerner prior to or at the expiration of the term. If the Company terminates the agreement without “cause” (as defined in the agreement) prior to the three-year anniversary of the Effective Date, the Company has agreed to (i) pay Mr. Lerner the amount of the monthly fees owed to Mr. Lerner for the period from the Effective Date to the two year anniversary of the Effective Date and (ii) take all commercially reasonably actions to cause (A) 325,000 shares of restricted common stock of the Company previously granted to Mr. Lerner, (B) 600,000 shares of restricted common stock of the Company previously granted to Mr. Lerner and (iii) 150,000 shares of restricted common stock of the Company granted to Mr. Lerner pursuant to the agreement, to be vested as of the date of such termination. | |
On April 24, 2014, the Company issued a promissory note in the amount of $300,000 to a related party, Clifford Lerner, the Company’s president, chief executive officer and the chairman of the Company’s Board of Directors. The promissory note bears interest at the rate of nine percent (9%) per annum. On March 25, 2015, the promissory note was repaid in full. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events |
Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued and determined that no events or transactions are required to be disclosed herein. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Significant Estimates and Judgments | Significant Estimates and Judgments |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the provision for future credit card chargebacks and subscription revenue refunds, estimates used to determine the fair value of our common stock, stock options, non-cash capital stock issuances, stock-based compensation, derivative instruments, debt discounts, conversion features and common stock warrants, collectability of our accounts receivable and the valuation allowance on deferred tax assets. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. We base estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates. | |
Convertible Instruments | Convertible Instruments |
The Company evaluates and bifurcates conversion features from the instruments containing such features and accounts for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the underlying instrument, (b) the hybrid instrument that contains both the embedded derivative instrument and the underlying instrument is not re-measured at fair value under otherwise applicable GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the underlying instrument is deemed to be conventional as that term is described under applicable GAAP. | |
Common Stock Purchase Warrants and Other Derivative Financial Instruments | Common Stock Purchase Warrants and Other Derivative Financial Instruments |
The Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or net-share settlement in common stock or (ii) give the Company a choice of net-cash settlement or settlement in common stock (physical settlement or net-share settlement). The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in common stock (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that certain freestanding derivatives, including the conversion feature embedded in the 12% Senior Secured Convertible Note (the “Note”) and warrants issued under the Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of February 13, 2015, by and between the Company and Sigma Opportunity Fund II, LLC (“Sigma II”), contained reset provisions and have been classified as derivative liabilities as more fully described in Note 5. | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements |
In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This standard amends the existing guidance to require that debt issuance costs be presented in the balance sheet as a deduction from the carrying amount of the related debt liability instead of as a deferred charge. ASU 2015-03 is effective on a retrospective basis for annual and interim reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company has elected to early-adopt ASU 2015-03 in connection with the issuance of these condensed consolidated financial statements and as a result, recorded the $314,249 of offering costs incurred in connection with the issuance of the Note (as defined in Note 10) as a debt discount on the date the Note was issued. |
Accounts_Receivable_Net_Tables
Accounts Receivable, Net (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounts Receivable, Net [Abstract] | |||||||||
Schedule of accounts receivable, net | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
(Unaudited) | |||||||||
Accounts receivable | $ | 303,774 | $ | 263,661 | |||||
Less: Reserve for future chargebacks | (54,256 | ) | (42,533 | ) | |||||
Total accounts receivable, net | $ | 249,518 | $ | 221,128 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||
Schedule of liabilities measured at fair value | The following table summarizes the liabilities measured at fair value on a recurring basis as of March 31, 2015: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
LIABILITIES: | |||||||||||||||||
Warrant liabilities | $ | - | $ | - | $ | 1,163,425 | 1,163,425 | ||||||||||
Compound embedded derivative | - | - | 950,000 | 910,000 | |||||||||||||
Total derivative liabilities | $ | - | $ | - | $ | 2,113,425 | $ | 2,113,425 | |||||||||
The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2014: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
LIABILITIES: | |||||||||||||||||
Warrant liability | $ | - | $ | - | $ | 23,425 | $ | 23,425 | |||||||||
Total derivative liability | $ | - | $ | - | $ | 23,425 | $ | 23,425 | |||||||||
Schedule of estimated fair value of the warrant liability | |||||||||||||||||
March 31, | December 31, | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
(Unaudited) | |||||||||||||||||
Stock price | $ | 0.19 | $ | 0.2 | |||||||||||||
Weighted average strike price | $ | 0.64 | $ | 2.5 | |||||||||||||
Remaining contractual term (years) | 1.9 | 1.1 | |||||||||||||||
Volatility | 100 | % | 125.7 | % | |||||||||||||
Risk-free rate | 0.5 | % | 0.3 | % | |||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||
The following table summarizes the values of certain assumptions used by the Company’s custom model to estimate the fair value of the conversion feature liability as of March 31, 2015: | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Stock price | $ | 0.19 | |||||||||||||||
Strike price | $ | 0.2 | |||||||||||||||
Remaining contractual term (years) | 1.9 | ||||||||||||||||
Volatility | 100 | % | |||||||||||||||
Risk-free rate | 0.5 | % | |||||||||||||||
Dividend yield | 0 | % | |||||||||||||||
Schedule of financial liabilities that are measured at fair value on a recurring basis | Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
Beginning balance | $ | 23,425 | $ | 140,550 | |||||||||||||
Fair value of derivatives issued | 2,090,000 | - | |||||||||||||||
Change in fair value of derivative liabilities | - | (117,125 | ) | ||||||||||||||
Ending balance | $ | 2,113,425 | $ | 23,425 |
Fixed_Assets_and_Intangible_As1
Fixed Assets and Intangible Assets, Net (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Fixed Assets and Intangible Assets, Net [Abstract] | |||||||||
Schedule of fixed assets and intangible assets | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
(Unaudited) | |||||||||
Computer equipment | $ | 226,419 | $ | 256,610 | |||||
Furniture and fixtures | 95,785 | 142,856 | |||||||
Leasehold improvements | 20,333 | 382,376 | |||||||
Software | 10,968 | 10,968 | |||||||
Website domain name | 124,938 | 124,938 | |||||||
Website costs | 40,500 | 40,500 | |||||||
Equipment under capital leases | 218,605 | 218,605 | |||||||
Total fixed assets | 737,548 | 1,176,853 | |||||||
Less: Accumulated depreciation and amortization | (294,680 | ) | (613,730 | ) | |||||
Total fixed assets and intangible assets, net | $ | 442,868 | $ | 563,123 |
Accrued_Expenses_and_Other_Cur1
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accrued Expenses and Other Current Liabilities [Abstract] | |||||||||
Schedule of accrued expenses and other current liabilities | March 31, | December 31, | |||||||
2015 | 2014 | ||||||||
(Unaudited) | |||||||||
Compensation and benefits | $ | 101,687 | $ | 360,515 | |||||
Deferred rent | 14,976 | 10,877 | |||||||
Professional fees | 43,125 | 254,807 | |||||||
Repayment of advertising agreement advance | 83,891 | 329,165 | |||||||
Other accrued expenses | 107,088 | 107,472 | |||||||
Total accrued expenses and other current liabilities | $ | 350,767 | $ | 1,062,836 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Weighted average assumptions used to estimate fair value of options granted | Three Months Ended March 31, 2015 | ||||||||
Expected volatility | 179.47 | % | |||||||
Expected life of option | 6.03 | ||||||||
Risk free interest rate | 1.72 | % | |||||||
Expected dividend yield | 0 | % | |||||||
Stock Options [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Schedule of non-employee restricted stock award activity | Number of | Weighted | |||||||
Options | Average | ||||||||
Exercise Price | |||||||||
Stock Options: | |||||||||
Outstanding at December 31, 2014 | 3,808,253 | $ | 0.55 | ||||||
Granted | 398,000 | 0.23 | |||||||
Expired or canceled, during the period | - | - | |||||||
Forfeited, during the period | (199,000 | ) | 0.27 | ||||||
Outstanding at March 31, 2015 | 4,007,253 | 0.53 | |||||||
Exercisable at March 31, 2015 | 2,341,896 | $ | 0.69 | ||||||
Non-Employee Stock Option [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Schedule of non-employee restricted stock award activity | Number of | Weighted | |||||||
Options | Average | ||||||||
Exercise Price | |||||||||
Non-Employee Stock Options: | |||||||||
Outstanding at December 31, 2014 | 250,000 | $ | 0.81 | ||||||
Granted | 25,000 | 0.2 | |||||||
Outstanding at March 31, 2015 | 275,000 | 0.75 | |||||||
Exercisable at March 31, 2015 | 250,000 | $ | 0.81 | ||||||
Restricted Stock Awards [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Schedule of restricted stock award and non-employee restricted stock award activity | Number of | Weighted | |||||||
RSAs | Average | ||||||||
Grant Date | |||||||||
Fair Value | |||||||||
Restricted Stock Awards: | |||||||||
Outstanding at December 31, 2014 | 10,325,000 | $ | 0.56 | ||||||
Vested | - | - | |||||||
Forfeited, during the period | - | - | |||||||
Outstanding at March 31, 2015 | 10,325,000 | $ | 0.56 | ||||||
Non-Employee Restricted Stock Awards [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Schedule of restricted stock award and non-employee restricted stock award activity | Number of | Weighted | |||||||
RSAs | Average | ||||||||
Grant Date | |||||||||
Fair Value | |||||||||
Non-Employee Restricted Stock Awards: | |||||||||
Outstanding at December 31, 2014 | 1,075,000 | $ | 0.42 | ||||||
Vested | - | - | |||||||
Outstanding at March 31, 2015 | 1,075,000 | $ | 0.42 |
Common_Stock_Warrants_Tables
Common Stock Warrants (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation and Common Stock Purchase Warrants [Abstract] | |||||||||
Schedule of warrant activity | Number of | Weighted | |||||||
Warrants | Average | ||||||||
Exercise Price | |||||||||
Stock Warrants: | |||||||||
Outstanding at December 31, 2014 | 2,367,500 | $ | 2.48 | ||||||
Granted | 15,000,000 | 0.35 | |||||||
Exercised | - | - | |||||||
Forfeited | - | - | |||||||
Outstanding at March 31, 2015 | 17,367,500 | 0.64 | |||||||
Warrants exercisable at March 31, 2015 | 17,367,500 | $ | 0.64 |
Net_Loss_Per_Common_Share_Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Net Loss Per Common Share [Abstract] | |||||||||
Reconciliation of numerator and denominator used in computing basic and diluted net loss per common share | Three Months Ended | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Numerator: | |||||||||
Net loss | $ | (1,219,179 | ) | $ | (933,094 | ) | |||
Denominator: | |||||||||
Basic shares: | |||||||||
Weighted-average number of shares of common stock outstanding | 39,413,824 | 39,142,548 | |||||||
Diluted shares: | |||||||||
Weighted-average number of shares used to compute basic net loss per share of common stock | 39,413,824 | 39,142,548 | |||||||
Weighted-average number of shares used to compute diluted net loss per share of common stock | 39,413,824 | 39,142,548 | |||||||
Net loss per share of common stock: | |||||||||
Basic | $ | (0.03 | ) | $ | (0.02 | ) | |||
Diluted | $ | (0.03 | ) | $ | (0.02 | ) |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) | Mar. 31, 2015 |
Summary of Significant Accounting Policies (Textual) | |
Percentage of convertible note | 12.00% |
Accounts_Receivable_Net_Detail
Accounts Receivable, Net (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable | $303,774 | $263,661 |
Less: Reserve for future chargebacks | -54,256 | -42,533 |
Total accounts receivable, net | $249,518 | $221,128 |
Accounts_Receivable_Net_Detail1
Accounts Receivable, Net (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Accounts Receivable, Net (Textual) | ||
Unsettled transactions from credit card payment processors | $152,859 | $135,535 |
Accounts receivable due from Apple Inc. | $122,624 | $116,427 |
Percentage of accounts receivable | 49.10% | 52.60% |
Security_Deposits_Details
Security Deposits (Details) (USD $) | Mar. 31, 2015 | Feb. 28, 2015 | Dec. 31, 2014 | Oct. 31, 2014 |
Security Deposits (Textual) | ||||
Short term security deposits | $24,956 | $115,104 | ||
Security deposits | 200,659 | |||
New capital lease obligations for equipment | 135,000 | |||
Long term security deposits | $335,659 | $135,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
LIABILITIES: | ||
Total derivative liabilities | $2,113,425 | $23,425 |
Warrant liabilities [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | 1,163,425 | 23,425 |
Compound embedded derivative [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | 910,000 | |
Level 1 [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | ||
Level 1 [Member] | Warrant liabilities [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | ||
Level 1 [Member] | Compound embedded derivative [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | ||
Level 2 [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | ||
Level 2 [Member] | Warrant liabilities [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | ||
Level 2 [Member] | Compound embedded derivative [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | ||
Level 3 [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | 2,113,425 | 23,425 |
Level 3 [Member] | Warrant liabilities [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | 1,163,425 | 23,425 |
Level 3 [Member] | Compound embedded derivative [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | $950,000 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 1) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Warrant liabilities [Member] | ||
Schedule of estimated fair value of the warrant liability | ||
Stock price | $0.19 | $0.20 |
Strike price | $0.64 | $2.50 |
Remaining contractual term (years) | 1 year 10 months 24 days | 1 year 1 month 6 days |
Volatility | 100.00% | 125.70% |
Risk-free rate | 0.50% | 0.30% |
Dividend yield | 0.00% | 0.00% |
Conversion feature liability [Member] | ||
Schedule of estimated fair value of the warrant liability | ||
Stock price | $0.19 | |
Strike price | $0.64 | |
Remaining contractual term (years) | 1 year 10 months 24 days | |
Volatility | 100.00% | |
Risk-free rate | 0.50% | |
Dividend yield | 0.00% |
Fair_Value_Measurements_Detail2
Fair Value Measurements (Details 2) (Recurring [Member], Level 3 [Member], USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Recurring [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||
Beginning balance | $23,425 | $140,550 |
Fair value of derivatives issued | 2,090,000 | |
Change in fair value of derivative liabilities | -117,125 | |
Ending balance | $2,113,425 | $23,425 |
Fair_Value_Measurements_Detail3
Fair Value Measurements (Details Textual) | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value Measurements (Textual) | |
Incremental discount rate premium due to lack of marketability | 10.00% |
Fixed_Assets_and_Intangible_As2
Fixed Assets and Intangible Assets, Net (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of fixed assets and intangible assets | ||
Total fixed assets | $737,548 | $1,176,853 |
Less: Accumulated depreciation and amortization | -294,680 | -613,730 |
Total fixed assets and intangible assets, net | 442,868 | 563,123 |
Computer equipment [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 226,419 | 256,610 |
Furniture and fixtures [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 95,785 | 142,856 |
Leasehold improvements [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 20,333 | 382,376 |
Software [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 10,968 | 10,968 |
Website domain name [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 124,938 | 124,938 |
Website costs [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 40,500 | 40,500 |
Equipment under capital leases [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | $218,605 | $218,605 |
Fixed_Assets_and_Intangible_As3
Fixed Assets and Intangible Assets, Net (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Fixed Assets and Intangible Assets, Net (Textual) | ||
Depreciation and amortization expense | $60,819 | $43,263 |
Loss on disposal of fixed assets | $79,628 |
Notes_Receivable_Details
Notes Receivable (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Notes Receivable (Textual) | ||
Notes receivable | $79,154 | $78,520 |
Maturity period of due note | At various times during 2021-2023 | |
Notes receivable, interest rate, minimum | 2.80% | |
Notes receivable, interest rate, maximum | 3.57% |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Taxes (Textua) | ||
Provision for income taxes |
Accrued_Expenses_and_Other_Cur2
Accrued Expenses and Other Current Liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Schedule of accrued expenses and other current liabilities | ||
Compensation and benefits | $101,687 | $360,515 |
Deferred rent | 14,976 | 10,877 |
Professional fees | 43,125 | 254,807 |
Repayment of advertising agreement advance | 83,891 | 329,165 |
Other accrued expenses | 107,088 | 107,472 |
Total accrued expenses and other current liabilities | $350,767 | $1,062,836 |
Notes_and_Convertible_Note_Pay1
Notes and Convertible Note Payable (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | |
Feb. 13, 2015 | 20-May-14 | Jan. 31, 2011 | Mar. 31, 2015 | Dec. 31, 2014 | Apr. 24, 2014 | |
Notes Payable (Textual) | ||||||
Issuance of a promissory note | $100,000 | |||||
Promissory note payable interest rate | 15.00% | |||||
Maturity date | 20-Feb-15 | 13-Feb-17 | ||||
Warrant issued to purchase common stock | 25,000 | 255,000 | ||||
Deferred financing cost | 4,750 | |||||
Common stock, shares issued | 50,007,826 | 49,507,826 | ||||
Percentage of convertible note | 12.00% | |||||
Convertible note, description | (i) the Company's failure to pay any amounts due and payable when and as required, (ii) failure of a representation or warranty made by the Company to be correct and accurate when made, (iii) the institution of bankruptcy or similar proceedings against the Company and (iv) the Company's inability to pay debts as they become due. The Note also requires the Company to maintain an aggregate cash balance of $1,350,000 in its bank accounts or it will be required to make partial prepayments on the Note. If the Company fails to maintain this aggregate cash balance in its bank accounts for a thirty day period, it is required to make a $125,000 prepayment on the Note. For each subsequent calendar month that the aggregate cash balance in the Company's bank accounts does not equal or exceed $1,500,000, the Company must make an additional $125,000 prepayment on the Note. | |||||
Warrants exercise price | $0.32 | $2.50 | ||||
Warrants expiration date | 20-May-19 | 19-Jan-16 | ||||
Advisory fees | 240,000 | |||||
Conversion price | $0.20 | |||||
Interest expense under convertible debt | 46,000 | |||||
Percentage of outstanding capital stock secured | 65.00% | |||||
Fair value of embedded conversion feature and warrants | 950,000 | 798,000 | ||||
Amortization expense | 110,148 | |||||
Fair value of the common stock and warrants | 30,000 | |||||
Derivative instruments | 150,000 | |||||
Advisory Agreement [Member] | ||||||
Notes Payable (Textual) | ||||||
Warrant issued to purchase common stock | 4,500,000 | |||||
Shares issued for consulting services, shares | 150,000 | |||||
Amortization expense | 23,441 | |||||
Fair value of the common stock and warrants | 342,000 | |||||
Chief Executive Officer | ||||||
Notes Payable (Textual) | ||||||
Issuance of a promissory note | 300,000 | |||||
Promissory note payable interest rate | 9.00% | |||||
Maturity date, description | The promissory note was originally due and payable on January 24, 2015, but was subsequently amended to extend its maturity for an additional nine months and was due and payable on October 24, 2015. | |||||
Sigma [Member] | ||||||
Notes Payable (Textual) | ||||||
Deferred financing cost | 314,249 | |||||
Debt and equity securities | 3,000,000 | |||||
Exercise price | $0.35 | |||||
Common stock issued for domain name, shares | 4,500,000 | |||||
Warrants expiration date | 13-Feb-20 | |||||
Advisory fees | 10,000 | |||||
Consulting expense | $20,000 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (Stock Options [Member]) | 3 Months Ended |
Mar. 31, 2015 | |
Stock Options [Member] | |
Weighted average assumptions used to estimate fair value of options granted | |
Expected volatility | 179.47% |
Expected life of option | 6 years 11 days |
Risk free interest rate | 1.72% |
Expected dividend yield | 0.00% |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 1) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Stock Options [Member] | |
Schedule of Stock Options, Non-employee Stock Option and Unvested Stock Options | |
Beginning Balance, Number of Options/Warrants | 3,808,253 |
Granted | 398,000 |
Expired or canceled, during the period | |
Forfeited, during the period | -199,000 |
Ending Balance, Number of Options/Warrants | 4,007,253 |
Options/Warrants exercisable | 2,341,896 |
Beginning Balance, Weighted Average Exercise Price | $0.55 |
Granted, Weighted Average Exercise Price | $0.23 |
Expired or canceled, during the period | |
Forfeited, Weighted Average Exercise Price | $0.27 |
Ending Balance, Weighted Average Exercise Price | $0.53 |
Exercisable, Weighted Average Exercise Price | $0.69 |
Non-Employee Stock Option [Member] | |
Schedule of Stock Options, Non-employee Stock Option and Unvested Stock Options | |
Beginning Balance, Number of Options/Warrants | 250,000 |
Granted | 25,000 |
Ending Balance, Number of Options/Warrants | 275,000 |
Options/Warrants exercisable | 250,000 |
Beginning Balance, Weighted Average Exercise Price | $0.81 |
Granted, Weighted Average Exercise Price | $0.20 |
Ending Balance, Weighted Average Exercise Price | $0.75 |
Exercisable, Weighted Average Exercise Price | $0.81 |
StockBased_Compensation_Detail2
Stock-Based Compensation (Details 2) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Restricted Stock [Member] | |
Schedule of restricted stock award and non-employee stock option activity | |
Beginning balance | 10,325,000 |
Vested | |
Forfeited, during the period | |
Ending balance | 10,325,000 |
Weighted average grant date fair value, Beginning balance | $0.56 |
Weighted average grant date fair value, Vested | |
Weighted average grant date fair value, Forfeited | |
Weighted average grant date fair value, Ending balance | $0.56 |
Non-Employee Restricted Stock Awards [Member] | |
Schedule of restricted stock award and non-employee stock option activity | |
Beginning balance | 1,075,000 |
Vested | |
Ending balance | 1,075,000 |
Weighted average grant date fair value, Beginning balance | $0.42 |
Weighted average grant date fair value, Vested | |
Weighted average grant date fair value, Ending balance | $0.42 |
StockBased_Compensation_Detail3
Stock-Based Compensation (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock-Based Compensation (Textual) | ||
Stock-based compensation expense | $229,863 | $222,476 |
Total unrecognized compensation cost related to non-vested stock options | 449,891 | |
Number of shares authorized under Option | 7,500,000 | |
Weighted average expected recognition period of compensation cost not yet recognized | 3 years 5 months 1 day | |
Percentage of common stock delivered pursuant to incentive stock options | 100.00% | |
Number of stock reserved for issuance | 3,517,747 | |
Stock Options [Member] | ||
Stock-Based Compensation (Textual) | ||
Stock options outstanding, intrinsic value | 0 | 20,000 |
Stock options exercisable, intrinsic value | 0 | 0 |
Stock-based compensation expense | 24,092 | 47,654 |
Aggregate fair value of option granted | 88,604 | |
Non Employee Stock Option [Member] | ||
Stock-Based Compensation (Textual) | ||
Stock options outstanding, intrinsic value | 0 | 0 |
Stock options exercisable, intrinsic value | 0 | 0 |
Stock-based compensation expense | 3,036 | 804 |
Aggregate fair value of option granted | 3,791 | |
Unvested Restricted Stock Award [Member] | ||
Stock-Based Compensation (Textual) | ||
Stock-based compensation expense | 205,771 | 174,822 |
Total unrecognized compensation cost related to non-vested stock options | 3,334,767 | |
Weighted average expected recognition period of compensation cost not yet recognized | 4 years 2 months 27 days | |
Non-employee unvested restricted stock awards [Member] | ||
Stock-Based Compensation (Textual) | ||
Stock-based compensation expense | -22,326 | 7,862 |
Total unrecognized compensation cost related to non-vested stock options | $164,732 | |
Weighted average expected recognition period of compensation cost not yet recognized | 7 years 2 months 27 days |
Common_Stock_Warrants_Details
Common Stock Warrants (Details) (Stock Warrant [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Stock Warrant [Member] | |
Schedule of warrant activity | |
Beginning Balance, Number of Options/Warrants | 2,367,500 |
Granted | 15,000,000 |
Exercised | |
Forfeited | |
Ending Balance, Number of Options/Warrants | 17,367,500 |
Options/Warrants exercisable | 17,367,500 |
Beginning Balance, Weighted Average Exercise Price | $2.48 |
Granted, Weighted Average Exercise Price | $0.35 |
Exercised, Weighted Average Exercise Price | |
Forfeited, Weighted Average Exercise Price | |
Ending Balance, Weighted Average Exercise Price | $0.64 |
Exercisable, Weighted Average Exercise Price | $0.64 |
Common_Stock_Warrants_Details_
Common Stock Warrants (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended | 0 Months Ended | |||
20-May-14 | Jan. 31, 2011 | Mar. 31, 2015 | Mar. 31, 2014 | Feb. 13, 2015 | Dec. 31, 2014 | |
Common Stock Warrants (Textual) | ||||||
Gross proceeds from equity financing | $8,500,000 | |||||
Shares of common stock issued | 25,000 | 4,250,000 | ||||
Common stock price per share | $2 | |||||
Warrant issued to purchase common stock | 25,000 | 255,000 | ||||
Warrants exercise price | $0.32 | $2.50 | ||||
Warrants expiration date | 20-May-19 | 19-Jan-16 | ||||
Net proceeds from issuance of warrants | 7,915,700 | |||||
Offering cost of warrants | 584,300 | |||||
Fair value of warrants | 23,425 | 23,425 | ||||
Gain on change in fair value of warrants | -70,275 | |||||
Deferred financing cost | 4,750 | |||||
Common stock shares issued for warrant exercised | 2,125,000 | |||||
Percentage of convertible note | 12.00% | |||||
Common stock, shares issued | 50,007,826 | 49,507,826 | ||||
Warrant liabilities [Member] | ||||||
Common Stock Warrants (Textual) | ||||||
Fair value of warrants | 2,050,000 | |||||
Sigma [Member] | ||||||
Common Stock Warrants (Textual) | ||||||
Warrants expiration date | 13-Feb-20 | |||||
Deferred financing cost | 314,249 | |||||
Debt and equity securities | $3,000,000 | |||||
Sigma II [Member] | ||||||
Common Stock Warrants (Textual) | ||||||
Warrant issued to purchase common stock | 10,500,000 |
Net_Loss_Per_Common_Share_Deta
Net Loss Per Common Share (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator: | ||
Net loss | ($1,219,179) | ($933,094) |
Basic shares: | ||
Weighted-average number of shares of common stock outstanding | 39,413,824 | 39,142,548 |
Diluted shares: | ||
Weighted-average number of shares used to compute basic net loss per share of common stock | 39,413,824 | 39,142,548 |
Weighted-average number of shares used to compute diluted net loss per share of common stock | 39,413,824 | 39,142,548 |
Net loss per share of common stock: | ||
Basic | ($0.03) | ($0.02) |
Diluted | ($0.03) | ($0.02) |
Net_Loss_Per_Common_Share_Deta1
Net Loss Per Common Share (Details Textual) (Stock Option And Warrants [Member]) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Option And Warrants [Member] | ||
Net Loss Per Common Share (Textual) | ||
Shares issuable excluded from computation of diluted net loss per share | 46,699,753 | 16,823,528 |
Commitments_Details
Commitments (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Feb. 04, 2015 | Jun. 30, 2014 | Mar. 31, 2015 | Oct. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Feb. 28, 2015 | Dec. 31, 2014 | |
Agreement | ||||||||
Commitments (Textual) | ||||||||
Security deposit | $200,659 | |||||||
Monthly office rent payments on operating lease | 25,000 | |||||||
Expiration date of lease | 4-Mar-22 | |||||||
Acquisition Agreement [Member] | ||||||||
Commitments (Textual) | ||||||||
Upfront payment under agreements | 500,000 | |||||||
Earnings under acquisition agreement | 170,835 | |||||||
Advance repayment | 246,874 | 329,165 | ||||||
Office Space [Member] | ||||||||
Commitments (Textual) | ||||||||
Rent expense | 27,517 | |||||||
HP [Member] | ||||||||
Commitments (Textual) | ||||||||
Number of lease agreements cancelled | 2 | |||||||
Description of capital lease agreements | Two HP lease agreements were canceled due to price negotiations and we entered into two new three-year lease agreements with HP for equipment and certain financed items. | |||||||
Amortization for capital leases | 18,217 | 0 | ||||||
Equinix [Member] | ||||||||
Commitments (Textual) | ||||||||
Monthly recurring fees | 8,450 | |||||||
Nonrecurring fees | 9,700 | |||||||
Hosting expense | $46,549 | $43,791 | ||||||
Term of service agreement | 2 years | |||||||
Description of renewal of service agreement | Agreement automatically renews for additional twelve month terms unless earlier terminated by either party. |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 1 Months Ended | |||||||||||
Jan. 31, 2013 | Sep. 30, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Mar. 31, 2015 | Dec. 31, 2014 | 20-May-14 | Apr. 24, 2014 | |
Related Party Transactions (Textual) | ||||||||||||
Promissory note, amount | $1,079,178 | |||||||||||
Promissory note payable interest rate | 15.00% | |||||||||||
Chief Executive Officer [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Promissory note payable interest rate | 9.00% | |||||||||||
Lerner [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Consulting agreement term | 3 years | |||||||||||
Initial compensation fee | 25,000 | |||||||||||
Per month consulting fee | 5,000 | |||||||||||
Compensation agreement term | 2 years | |||||||||||
Lerner [Member] | Issuance One [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Issuance of restricted shares of common stock | 325,000 | |||||||||||
Lerner [Member] | Issuance Two [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Issuance of restricted shares of common stock | 600,000 | |||||||||||
Lerner [Member] | Issuance Three [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Issuance of restricted shares of common stock | 150,000 | |||||||||||
Dcl Ventures Inc [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Share purchase under initial investment | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 50,000 | |||||
Investment in DCL Ventures, Inc | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $50,000 |