Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 03, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Snap Interactive, Inc | |
Entity Central Index Key | 1,355,839 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 39,692,826 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 1,824,642 | $ 2,131,262 |
Credit card holdback receivable | 156,049 | 165,853 |
Accounts receivable, net of allowances and reserves of $61,170 and $55,468, respectively | 222,425 | 206,547 |
Prepaid expense and other current assets | 82,141 | 108,871 |
Total current assets | 2,285,257 | 2,612,533 |
Fixed assets and intangible assets, net | 359,174 | 387,617 |
Notes receivable | 81,123 | 81,123 |
Long term security deposits | 279,410 | 279,410 |
Investments | 200,000 | 200,000 |
Total assets | 3,204,964 | 3,560,683 |
Current liabilities: | ||
Accounts payable | 1,246,790 | 1,065,662 |
Accrued expenses and other current liabilities | 150,710 | 367,018 |
Deferred subscription revenue | 1,499,465 | $ 1,505,862 |
Convertible note payable, net of discount | 1,936,696 | |
Total current liabilities | 4,833,661 | $ 2,938,542 |
Deferred rent, net of current portion | $ 106,147 | 99,595 |
Convertible note payable, net of discount | 1,636,585 | |
Derivative liabilities | $ 1,220,000 | 473,425 |
Capital lease obligations, net of current portion | 55,410 | 75,560 |
Total liabilities | $ 6,215,218 | $ 5,223,707 |
Commitments and Contingencies | ||
Stockholders' 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, 50,017,826 and 50,017,826 shares issued, respectively, and 39,692,826 and 39,692,826 shares outstanding, respectively | $ 39,693 | $ 39,693 |
Additional paid-in capital | 13,128,183 | 12,974,409 |
Accumulated deficit | (16,178,130) | (14,677,126) |
Total stockholders' deficit | (3,010,254) | (1,663,024) |
Total liabilities and stockholders' deficit | $ 3,204,964 | $ 3,560,683 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Balance Sheets [Abstract] | ||
Allowances and reserves on accounts receivables | $ 61,170 | $ 55,468 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 50,017,826 | 50,017,826 |
Common stock, shares outstanding | 39,692,826 | 39,692,826 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Subscription revenue | $ 2,507,148 | $ 3,129,310 |
Advertising revenue | 170,119 | 56,773 |
Total revenues | 2,677,267 | 3,186,083 |
Costs and expenses: | ||
Cost of revenue | 435,658 | 450,346 |
Sales and marketing expense | 1,292,164 | 1,781,506 |
Product development expense | 445,548 | 629,775 |
General and administrative expense | 832,652 | 1,307,231 |
Total costs and expenses | 3,006,022 | 4,168,858 |
Loss from operations | (328,755) | (982,775) |
Interest expense, net | (425,674) | $ (236,404) |
Change in fair value of derivative liabilities | (746,575) | |
Loss before provision for income taxes | $ (1,501,004) | $ (1,219,179) |
Provision for income taxes | ||
Net loss | $ (1,501,004) | $ (1,219,179) |
Net loss per share of common stock: | ||
Basic and diluted | $ (0.04) | $ (0.03) |
Weighted average number of shares of common stock used in calculating net loss per share of common stock: | ||
Basic and diluted | 39,692,826 | 39,413,824 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Equity Deficit (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance at Dec. 31, 2015 | $ (1,663,024) | $ 39,693 | $ 12,974,409 | $ (14,677,126) |
Balance, Shares at Dec. 31, 2015 | 39,692,826 | |||
Stock-based compensation expense for restricted stock awards | 111,825 | 111,825 | ||
Stock-based compensation expense for stock options | 41,949 | 41,949 | ||
Net loss | (1,501,004) | $ (1,501,004) | ||
Balance at Mar. 31, 2016 | $ (3,010,254) | $ 39,693 | $ 13,128,183 | $ (16,178,130) |
Balance, Shares at Mar. 31, 2016 | 39,692,826 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (1,501,004) | $ (1,219,179) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | $ 36,515 | 60,819 |
Lease obligation interest expense | 7,778 | |
Stock-based compensation expense | $ 153,774 | 229,863 |
Loss on disposal of fixed assets | 79,628 | |
Amortization of debt issuance cost | $ 38,743 | 21,023 |
Amortization of debt discount | 261,368 | $ 133,589 |
Change in fair value of derivative liabilities | 746,575 | |
Changes in operating assets and liabilities: | ||
Credit card holdback receivable | 9,804 | $ 432,846 |
Accounts receivable | $ (15,878) | (28,390) |
Security deposits | (110,511) | |
Prepaid expenses and other current assets | $ 26,730 | (16,352) |
Accounts payable, accrued expenses and other current liabilities | (37,970) | (683,598) |
Deferred rent | 6,552 | 4,099 |
Deferred subscription revenue | $ (6,397) | 28,256 |
Deferred advertising revenue | 7,359 | |
Net cash used in operating activities | $ (281,188) | (1,052,770) |
Cash flows from investing activities: | ||
Purchase of property and equipment | $ (8,072) | (26,192) |
Proceeds from sale of fixed assets | 6,000 | |
Notes receivable | (634) | |
Net cash used in investing activities | $ (8,072) | (20,826) |
Cash flows from financing activities: | ||
Payments of capital lease obligations | $ (17,360) | (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 (used in) provided by financing activities | $ (17,360) | 2,263,017 |
Net (decrease) increase in cash and cash equivalents | (306,620) | 1,189,421 |
Balance of cash and cash equivalents at beginning of period | 2,131,262 | 1,138,385 |
Balance of cash and cash equivalents at end of period | $ 1,824,642 | 2,327,806 |
Non-cash investing and financing activities: | ||
Compound embedded derivative under the Note and Securities Purchase Agreement recorded as derivative liabilities (See Note 6) | 1,748,000 | |
Warrants issued under the Advisory Services Agreement as additional consideration for the Note and recorded as derivative liabilities (See Note 6) | 342,000 | |
Common stock issued under the Advisory Services Agreement as additional consideration for the Note | $ 30,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
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 operates a portfolio of two dating applications, FirstMet, which is available through desktop and mobile platforms, and The Grade, which is available through iOS and Android platforms. In March 2016, the Company completed a rebranding of its dating application “Are You Interested?” (“AYI”) under the name FirstMet. The condensed consolidated financial statements included in this report have been prepared on a going concern basis 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, 2015 (the “Form 10-K”), filed with the SEC on March 14, 2016. 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 balance sheet, results of operations, cash flows and changes in the stockholders’ 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, 2016 are not necessarily indicative of results for the year ending December 31, 2016, or for any other period. |
Going Concern and Management's
Going Concern and Management's Plans | 3 Months Ended |
Mar. 31, 2016 | |
Going Concern and Management Plans [Abstract] | |
Going Concern and Management's Plans | 2. Going Concern and Management’s Plans The Company reported a loss of $1.5 million for the three months ended March 31, 2016. On March 31, 2016, the Company’s accumulated deficit amounted to $16.2 million. The Company’s convertible note payable with a principal amount outstanding of $3 million matures on February 13, 2017. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company needs to raise additional capital in order to sustain its operations while continuing the longer term efforts contemplated under its business plan. The Company cannot provide any assurance that it will raise additional capital. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. The accompanying financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies During the three months ended March 31, 2016, there were no material changes to the Company’s significant accounting policies from those disclosed in the Form 10-K. Certain significant accountant policies relied on in the preparation of the accompanying unaudited condensed consolidated financial statements are as follows: 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 condensed consolidated 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 the Company’s common stock, stock options, non-cash capital stock issuances, stock-based compensation, derivative instruments, debt discounts, conversion features and common stock warrants, collectability of 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. The Company bases estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates. Reclassification Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the previously reported net loss. Recently Issued Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-09”). ASU 2016-09 requires an entity to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, either early adoption permitted. The Company is currently evaluating ASU 2016-09 and its impact on its consolidated financial statements or disclosures. |
Accounts Receivable, Net
Accounts Receivable, Net | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Receivable, Net [Abstract] | |
Accounts Receivable, Net | 4. Accounts Receivable, Net Accounts receivable, net consisted of the following as of March 31, 2016 and December 31, 2015: March 31, December 31, 2016 2015 (Unaudited) Accounts receivable $ 283,595 $ 262,015 Less: Reserve for future chargebacks (61,170 ) (55,468 ) Total accounts receivable, net $ 222,425 $ 206,547 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 $75,084 as of March 31, 2016, as compared to $147,582 at December 31, 2015. The amount of accounts receivable due from Apple Inc. was $86,549, or 38.9% of the Company’s accounts receivable, as of March 31, 2016, compared to $76,074, or 36.8% of the Company’s accounts receivable, at December 31, 2015. |
Security Deposits
Security Deposits | 3 Months Ended |
Mar. 31, 2016 | |
Security Deposits [Abstract] | |
Security Deposits | 5. Security Deposits 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”). In November 2015, HP returned $60,000 of the security deposit. The Company recorded $75,000 under long-term security deposits on its Condensed Consolidated Balance Sheet as of March 31, 2016 and December 31, 2015, respectively. In February 2015, the Company issued $200,659 as a security deposit as part of a new office rent lease (see Note 15). The Company recorded the $200,659 under long-term security deposits on its Condensed Consolidated Balance Sheet as of March 31, 2016 and December 31, 2015. In November 2015, the Company issued $3,751 as a security deposit as part of the Company’s new data center. The Company recorded the $3,751 under long-term security deposits on its Condensed Consolidated Balance Sheet as of March 31, 2016 and December 31, 2015. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 6. 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, 2016: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 730,000 730,000 Compound embedded derivative - - 490,000 490,000 Total derivative liabilities $ - $ - $ 1,220,000 $ 1,220,000 The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2015: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 273,425 $ 273,425 Compound embedded derivative - - 200,000 200,000 Total derivative liabilities $ - $ - $ 473,425 $ 473,425 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 issued in connection with the Company’s convertible note payable (the “Note”) and the Note’s embedded conversion feature 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 accordance with Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity 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, 2016 and December 31, 2015: March 31, December 31, 2016 2015 (Unaudited) Stock price $ 0.13 $ 0.08 Weighted average strike price $ 0.35 $ 0.64 Remaining contractual term (years) 3.87 4.12 Volatility 110.0 % 95.0 % Risk-free rate 1.04 % 1.54 % Dividend yield 0.0 % 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, 2016 and December 31, 2015: March 31, December 31 2016 2015 (Unaudited) Stock price $ 0.13 $ 0.08 Strike price $ 0.20 $ 0.20 Remaining contractual term (years) 0.87 1.12 Volatility 110.0 % 95.0 % Risk-free rate 0.59 % 0.65 % Dividend yield 0.0 % 0.0 % 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 2016 2015 Beginning balance $ 473,425 $ 23,425 Fair value of derivatives issued - 2,090,000 Change in fair value of derivative liabilities 746,575 - Ending balance $ 1,220,000 $ 2,113,425 |
Fixed Assets and Intangible Ass
Fixed Assets and Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2016 | |
Fixed Assets and Intangible Assets, Net [Abstract] | |
Fixed Assets and Intangible Assets, Net | 7. Fixed Assets and Intangible Assets, Net Fixed assets and intangible assets, net consisted of the following at March 31, 2016 and December 31, 2015: March 31, December 31, 2016 2015 (Unaudited) Computer equipment $ 268,427 $ 260,355 Furniture and fixtures 98,160 98,160 Leasehold improvements 21,026 21,026 Software 10,968 10,968 Website domain name 139,025 139,025 Website costs 40,500 40,500 Equipment under capital leases 218,605 218,605 Total fixed assets 796,711 788,639 Less: Accumulated depreciation and amortization (437,537 ) (401,022 ) Total fixed assets and intangible assets, net $ 359,174 $ 387,617 Depreciation and amortization expense for the three months ended March 31, 2016 was $36,515, as compared to $60,819 for the three months ended March 31, 2015. The Company only holds fixed assets in the United States. |
Notes Receivable
Notes Receivable | 3 Months Ended |
Mar. 31, 2016 | |
Notes Receivable [Abstract] | |
Notes Receivable | 8. Notes Receivable At March 31, 2016, the Company had notes receivable due in the aggregate amount of $81,123 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, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 9. Income Taxes The Company had no income tax benefit or provision for the three months ended March 31, 2016 and 2015. Since the Company incurred a net loss for the three months ended March 31, 2016 and 2015, 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 Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2016 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following at March 31, 2016 and December 31, 2015: March 31, December 31, 2016 2015 (Unaudited) Compensation and benefits $ 69,425 $ 176,410 Professional fees - 102,200 Capital lease obligations 76,285 73,494 Other accrued expenses 5,000 14,914 Total accrued expenses and other current liabilities $ 150,710 $ 367,018 |
Convertible Note Payable
Convertible Note Payable | 3 Months Ended |
Mar. 31, 2016 | |
Convertible Note Payable [Abstract] | |
Convertible Note Payable | 11. Convertible Note Payable 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. Amortization expense for the three months ended March 31, 2016 and 2015 was $38,743 and $20,232, respectively, which is included as interest expense on the accompanying Condensed Consolidated Statement of Operations. 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 6. 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. Contractual interest expense under the convertible note incurred for the three months ended March 31, 2016 and 2015 was $90,000 and $46,000, respectively. 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 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 in the Note) 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 fair value of these instruments was included in the value of the compound embedded derivative discussed above. Amortization expense related to the debt discount for the three months ended March 31, 2016 and 2015 was $261,369 and $133,589, respectively, which is included as interest expense on the accompanying Condensed Consolidated Statement of Operations. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation and Common Stock Warrants [Abstract] | |
Stock-Based Compensation | 12. 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, 2016, there were 1,124,922 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, 2016 and 2015: March 31, 2016 March 31, 2015 Expected volatility 167.7 % 179.5 % Expected life of option 6.15 6.03 Risk free interest rate 1.5 % 1.72 % Expected dividend yield 0.0 % 0.0 % 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, 2016: Number of Options Weighted Average Exercise Price Stock Options: Outstanding at January 1, 2016 6,177,203 $ 0.33 Granted 250,000 0.15 Expired or canceled, during the period - - Forfeited, during the period (27,125 ) 0.20 Outstanding at March 31, 2016 6,400,078 0.32 Exercisable at March 31, 2016 2,745,423 $ 0.61 At March 31, 2016, the aggregate intrinsic value of stock options that were outstanding and exercisable was $62,200 and $8,328, respectively. At March 31, 2015, the aggregate intrinsic value of stock options that were outstanding and exercisable was $0 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, 2016 and 2015 was $35,711 and $88,604, respectively. Stock-based compensation expense relating to stock options was $41,949 and $24,092 during the three months ended March 31, 2016 and 2015, 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, 2016, there was $413,405 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.13 years. Restricted Stock Awards The following table summarizes restricted stock award activity for the three months ended March 31, 2016: Number of RSAs Weighted Average Grant Date Fair Value Restricted Stock Awards: Outstanding at January 1, 2016 10,325,000 $ 0.56 Granted 5,000,000 0.11 Expired or canceled, during the period (5,000,000 ) 0.52 Forfeited, during the period - - Outstanding at March 31, 2016 10,325,000 $ 0.37 On March 3, 2016, the Company entered into a restricted stock cancellation and release agreement with Clifford Lerner, the Company’s Chairman of the Board of Directors, pursuant to which the Company cancelled a grant of 5,000,000 restricted shares of common stock awarded to Mr. Lerner on April 10, 2013 that would have vested 50% on the third anniversary of the date of grant and 50% on the fourth anniversary of the date of grant. Subsequently, on March 3, 2016, the Board of Directors awarded Mr. Lerner a replacement award of 5,000,000 restricted shares that vest 100% on the (10th) tenth anniversary of the date of grant, provided Mr. Lerner is providing services to the Company on such date. At March 31, 2016, there was $828,728 of total unrecognized compensation expense related to the restricted stock award, which is expected to be recognized over 10 years. At March 31, 2016, there was $2,260,256 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 7.79 years. Stock-based compensation expense relating to restricted stock awards was $111,825 and $205,771 for the three months ended March 31, 2016 and 2015, respectively. |
Common Stock Warrants
Common Stock Warrants | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation and Common Stock Warrants [Abstract] | |
Common Stock Warrants | 13. Common Stock Warrants 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 11. 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 6. 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 $680,000 at March 31, 2016, based on a model developed with the assistance of an independent third-party valuation expert. |
Net Loss Per Share of Common St
Net Loss Per Share of Common Stock | 3 Months Ended |
Mar. 31, 2016 | |
Net Loss Per Share of Common Stock [Abstract] | |
Net Loss Per Share of Common Stock | 14. 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. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2016 | |
Commitments [Abstract] | |
Commitments | 15. 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 $15,531 and $46,549 for the three months ended March 31, 2016 and 2015, respectively. On January 31, 2016, we cancelled the service agreement with Equinix. 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 are currently approximately $26,000 per month and escalates on an annual basis for each year of the term of the lease. Rent expense under this lease was $82,551 and $27,517 for the three months ended March 31, 2016 and 2015, respectively. 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 for the three months ended March 31, 2016 and 2015. Rent payments for equipment under capital leases were $22,734 for the three months ended March 31, 2016 and 2015. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 16. 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 an initial term of three years, 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. On January 31, 2016, the Company amended the consulting agreement with Darrell Lerner, pursuant to which the monthly fee owed to Mr. Lerner was reduced to $3,000 and the term of the agreement was set to automatically renew for successive one-year periods beginning on February 1, 2016 unless either party provides written notice of non-renewal. Consulting expense under this agreement for the three months ended March 31, 2016 was $11,000, as compared to $35,000 for the three months ended March 31, 2015. The Company or Mr. Lerner may terminate the agreement at any time without notice prior to or at the expiration of the term. If the Company terminates the agreement without “cause” (as defined in the agreement), the Company has agreed to (i) pay Mr. Lerner the amount of the unpaid 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. Stock-based compensation expense relating to non-employee restricted stock awards for the three months ended March 31, 2016 was $22,310, as compared to $(22,326) for the three months ended March 31, 2015. On March 3, 2016, the Company amended its employment agreement with Alexander Harrington, dated as of February 28, 2014, as amended, to provide that Mr. Harrington’s annual incentive bonus for the year ended December 31, 2015 would be replaced with (i) a cash payment of $25,000 and (ii) the right to receive a stock option representing the right to purchase 50,000 shares of Snap’s common stock at an exercise price of $0.20 per share. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. 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 Accoun24
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
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 condensed consolidated 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 the Company’s common stock, stock options, non-cash capital stock issuances, stock-based compensation, derivative instruments, debt discounts, conversion features and common stock warrants, collectability of 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. The Company bases estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates. |
Reclassification | Reclassification Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the previously reported net loss. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-09”). ASU 2016-09 requires an entity to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, either early adoption permitted. The Company is currently evaluating ASU 2016-09 and its impact on its consolidated financial statements or disclosures. |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable, net | March 31, December 31, 2016 2015 (Unaudited) Accounts receivable $ 283,595 $ 262,015 Less: Reserve for future chargebacks (61,170 ) (55,468 ) Total accounts receivable, net $ 222,425 $ 206,547 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Schedule of liabilities measured at fair value | Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 730,000 730,000 Compound embedded derivative - - 490,000 490,000 Total derivative liabilities $ - $ - $ 1,220,000 $ 1,220,000 The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2015: Level 1 Level 2 Level 3 Total LIABILITIES: Warrant liabilities $ - $ - $ 273,425 $ 273,425 Compound embedded derivative - - 200,000 200,000 Total derivative liabilities $ - $ - $ 473,425 $ 473,425 |
Schedule of estimated fair value of the warrant liability | March 31, December 31, 2016 2015 (Unaudited) Stock price $ 0.13 $ 0.08 Weighted average strike price $ 0.35 $ 0.64 Remaining contractual term (years) 3.87 4.12 Volatility 110.0 % 95.0 % Risk-free rate 1.04 % 1.54 % Dividend yield 0.0 % 0.0 % March 31, December 31 2016 2015 (Unaudited) Stock price $ 0.13 $ 0.08 Strike price $ 0.20 $ 0.20 Remaining contractual term (years) 0.87 1.12 Volatility 110.0 % 95.0 % Risk-free rate 0.59 % 0.65 % Dividend yield 0.0 % 0.0 % |
Schedule of financial liabilities that are measured at fair value on a recurring basis | Three Months Ended 2016 2015 Beginning balance $ 473,425 $ 23,425 Fair value of derivatives issued - 2,090,000 Change in fair value of derivative liabilities 746,575 - Ending balance $ 1,220,000 $ 2,113,425 |
Fixed Assets and Intangible A27
Fixed Assets and Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fixed Assets and Intangible Assets, Net [Abstract] | |
Schedule of fixed assets and intangible assets | March 31, December 31, 2016 2015 (Unaudited) Computer equipment $ 268,427 $ 260,355 Furniture and fixtures 98,160 98,160 Leasehold improvements 21,026 21,026 Software 10,968 10,968 Website domain name 139,025 139,025 Website costs 40,500 40,500 Equipment under capital leases 218,605 218,605 Total fixed assets 796,711 788,639 Less: Accumulated depreciation and amortization (437,537 ) (401,022 ) Total fixed assets and intangible assets, net $ 359,174 $ 387,617 |
Accrued Expenses and Other Cu28
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | March 31, December 31, 2016 2015 (Unaudited) Compensation and benefits $ 69,425 $ 176,410 Professional fees - 102,200 Capital lease obligations 76,285 73,494 Other accrued expenses 5,000 14,914 Total accrued expenses and other current liabilities $ 150,710 $ 367,018 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average assumptions used to estimate fair value of options granted | March 31, 2016 March 31, 2015 Expected volatility 167.7 % 179.5 % Expected life of option 6.15 6.03 Risk free interest rate 1.5 % 1.72 % Expected dividend yield 0.0 % 0.0 % |
Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of non-employee restricted stock award activity | Number of Options Weighted Average Exercise Price Stock Options: Outstanding at January 1, 2016 6,177,203 $ 0.33 Granted 250,000 0.15 Expired or canceled, during the period - - Forfeited, during the period (27,125 ) 0.20 Outstanding at March 31, 2016 6,400,078 0.32 Exercisable at March 31, 2016 2,745,423 $ 0.61 |
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 RSAs Weighted Average Grant Date Fair Value Restricted Stock Awards: Outstanding at January 1, 2016 10,325,000 $ 0.56 Granted 5,000,000 0.11 Expired or canceled, during the period (5,000,000 ) 0.52 Forfeited, during the period - - Outstanding at March 31, 2016 10,325,000 $ 0.37 |
Going Concern and Management'30
Going Concern and Management's Plans (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Going Concern and Management Plans (Textual) | |||
Net loss | $ (1,501,004) | $ (1,219,179) | |
Accumulated deficit | (16,178,130) | $ (14,677,126) | |
Convertible note payable principal amount outstanding | $ 3,000,000 | ||
Maturity date | Feb. 13, 2017 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) | Mar. 31, 2016 |
Summary of Significant Accounting Policies (Textual) | |
Percentage of convertible note | 12.00% |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable | $ 283,595 | $ 262,015 |
Less: Reserve for future chargebacks | (61,170) | (55,468) |
Total accounts receivable, net | $ 222,425 | $ 206,547 |
Accounts Receivable, Net (Det33
Accounts Receivable, Net (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Accounts Receivable, Net (Textual) | ||
Unsettled transactions from credit card payment processors | $ 75,084 | $ 147,582 |
Accounts receivable due from Apple Inc. | $ 86,549 | $ 76,074 |
Percentage of accounts receivable | 38.90% | 36.80% |
Security Deposits (Details)
Security Deposits (Details) - USD ($) | 1 Months Ended | ||||
Nov. 30, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | Feb. 28, 2015 | Oct. 31, 2014 | |
Security Deposits (Textual) | |||||
New capital lease obligations for equipment | $ 135,000 | ||||
Long term security deposits | $ 279,410 | $ 279,410 | |||
Security deposits | $ 3,751 | $ 200,659 | |||
Office [Member] | |||||
Security Deposits (Textual) | |||||
Long term security deposits | 200,659 | 200,659 | |||
Data center [Member] | |||||
Security Deposits (Textual) | |||||
Long term security deposits | 3,751 | 3,751 | |||
HP [Member] | |||||
Security Deposits (Textual) | |||||
Long term security deposits | $ 75,000 | $ 75,000 | |||
Refund of security deposit | $ 60,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring [Member] - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
LIABILITIES: | ||
Total derivative liabilities | $ 1,220,000 | $ 473,425 |
Warrant liabilities [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | 730,000 | 273,425 |
Compound embedded derivative [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | $ 490,000 | $ 200,000 |
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 | $ 1,220,000 | $ 473,425 |
Level 3 [Member] | Warrant liabilities [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | 730,000 | 273,425 |
Level 3 [Member] | Compound embedded derivative [Member] | ||
LIABILITIES: | ||
Total derivative liabilities | $ 490,000 | $ 200,000 |
Fair Value Measurements (Deta36
Fair Value Measurements (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Warrant liabilities [Member] | ||
Schedule of estimated fair value of the warrant liability | ||
Stock price | $ 0.13 | $ 0.08 |
Weighted average strike price | $ 0.35 | $ 0.64 |
Remaining contractual term (years) | 3 years 10 months 13 days | 4 years 1 month 13 days |
Volatility | 110.00% | 95.00% |
Risk-free rate | 1.04% | 1.54% |
Dividend yield | 0.00% | 0.00% |
Conversion feature liability [Member] | ||
Schedule of estimated fair value of the warrant liability | ||
Stock price | $ 0.13 | $ 0.08 |
Weighted average strike price | $ 0.20 | $ 0.20 |
Remaining contractual term (years) | 10 months 13 days | 1 year 1 month 13 days |
Volatility | 110.00% | 95.00% |
Risk-free rate | 0.59% | 0.65% |
Dividend yield | 0.00% | 0.00% |
Fair Value Measurements (Deta37
Fair Value Measurements (Details 2) - Recurring [Member] - Level 3 [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||
Beginning balance | $ 473,425 | $ 23,425 |
Fair value of derivatives issued | $ 2,090,000 | |
Change in fair value of derivative liabilities | $ 746,575 | |
Ending balance | $ 1,120,000 | $ 2,113,425 |
Fixed Assets and Intangible A38
Fixed Assets and Intangible Assets, Net (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of fixed assets and intangible assets | ||
Total fixed assets | $ 796,711 | $ 788,639 |
Less: Accumulated depreciation and amortization | (437,537) | (401,022) |
Total fixed assets and intangible assets, net | 359,174 | 387,617 |
Computer equipment [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 268,427 | 260,355 |
Furniture and fixtures [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 98,160 | 98,160 |
Leasehold improvements [Member] | ||
Schedule of fixed assets and intangible assets | ||
Total fixed assets | 21,026 | 21,026 |
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 | 139,025 | 139,025 |
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 A39
Fixed Assets and Intangible Assets, Net (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fixed Assets and Intangible Assets, Net (Textual) | ||
Depreciation and amortization expense | $ 36,515 | $ 60,819 |
Notes Receivable (Details)
Notes Receivable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Notes Receivable (Textual) | ||
Notes receivable | $ 81,123 | $ 81,123 |
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)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes (Textual) | ||
Provision for income taxes |
Accrued Expenses and Other Cu42
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of accrued expenses and other current liabilities | ||
Compensation and benefits | $ 69,425 | $ 176,410 |
Professional fees | 102,200 | |
Capital lease obligations | $ 76,285 | 73,494 |
Other accrued expenses | 5,000 | 14,914 |
Total accrued expenses and other current liabilities | $ 150,710 | $ 367,018 |
Convertible Note Payable (Detai
Convertible Note Payable (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Feb. 13, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Notes and Convertible Note Payable (Textual) | |||
Aggregate principal amount | $ 3,000,000 | ||
Maturity date | Feb. 13, 2017 | ||
Advisory fees | $ 240,000 | ||
Amortization expense | 261,368 | $ 133,589 | |
Common Stock [Member] | |||
Notes and Convertible Note Payable (Textual) | |||
Grant date fair value | 30,000 | ||
Warrant [Member] | |||
Notes and Convertible Note Payable (Textual) | |||
Grant date fair value | $ 342,000 | ||
Securities Purchase Agreement [Member] | |||
Notes and Convertible Note Payable (Textual) | |||
Debt and equity securities | $ 3,000,000 | ||
Shares of common stock issued | 350,000 | ||
Aggregate principal amount | $ 3,000,000 | ||
Warrant issued to purchase common stock | 10,500,000 | ||
Deferred financing cost | $ 314,249 | ||
Interest rate | 12.00% | ||
Maturity date | Feb. 13, 2017 | ||
Conversion price | $ 0.20 | ||
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. | ||
Percentage of outstanding capital stock secured | 65.00% | ||
Interest expense under convertible debt | $ 90,000 | 46,000 | |
Fair value of embedded conversion feature and warrants | 950,000 | ||
Fair value of the warrants | 798,000 | ||
Amortization expense | $ 38,743 | $ 20,232 | |
Advisory Agreement [Member] | |||
Notes and Convertible Note Payable (Textual) | |||
Warrant issued to purchase common stock | 4,500,000 | ||
Shares issued for consulting services, shares | 150,000 | ||
Advisory fees | $ 10,000 | ||
Derivative instruments | $ 150,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Stock Options [Member] | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Weighted average assumptions used to estimate fair value of options granted | ||
Expected volatility | 167.70% | 179.50% |
Expected life of option | 6 years 1 month 24 days | 6 years 11 days |
Risk free interest rate | 1.50% | 1.72% |
Expected dividend yield | 0.00% | 0.00% |
Stock-Based Compensation (Det45
Stock-Based Compensation (Details 1) - Stock Options [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Schedule of Stock Options, Non-employee Stock Option and Unvested Stock Options | |
Beginning Balance, Number of Options/Warrants | shares | 6,177,203 |
Granted | shares | 250,000 |
Expired or canceled, during the period | shares | |
Forfeited, during the period | shares | (27,125) |
Ending Balance, Number of Options/Warrants | shares | 6,400,078 |
Options/Warrants exercisable | shares | 2,745,423 |
Beginning Balance, Weighted Average Exercise Price | $ / shares | $ 0.33 |
Granted, Weighted Average Exercise Price | $ / shares | $ 0.15 |
Expired or canceled, during the period | $ / shares | |
Forfeited, Weighted Average Exercise Price | $ / shares | $ 0.20 |
Ending Balance, Weighted Average Exercise Price | $ / shares | 0.32 |
Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.61 |
Stock-Based Compensation (Det46
Stock-Based Compensation (Details 2) - Restricted Stock Awards [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Schedule of restricted stock award and non-employee stock option activity | |
Beginning balance | shares | 10,325,000 |
Granted | shares | 5,000,000 |
Expired or canceled, during the period | shares | (5,000,000) |
Forfeited, during the period | shares | |
Ending balance | shares | 10,325,000 |
Weighted average grant date fair value, Beginning balance | $ / shares | $ 0.56 |
Weighted average grant date fair value, Granted | $ / shares | 0.11 |
Weighted average grant date fair value, Expired or canceled | $ / shares | $ 0.52 |
Weighted average grant date fair value, Forfeited | $ / shares | |
Weighted average grant date fair value, Ending balance | $ / shares | $ 0.37 |
Stock-Based Compensation (Det47
Stock-Based Compensation (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-Based Compensation (Textual) | ||
Stock-based compensation expense | $ 153,774 | $ 229,863 |
Number of shares authorized under, Option | 7,500,000 | |
Percentage of common stock delivered pursuant to incentive stock options | 100.00% | |
Number of stock reserved for issuance | 1,124,922 | |
Stock Options [Member] | ||
Stock-Based Compensation (Textual) | ||
Stock options outstanding, intrinsic value | $ 62,200 | 0 |
Stock options exercisable, intrinsic value | 8,328 | 0 |
Stock-based compensation expense | 41,949 | 24,092 |
Total unrecognized compensation expenses | $ 413,405 | |
Weighted average expected recognition period of compensation cost not yet recognized | 3 years 1 month 17 days | |
Aggregate fair value of option granted | $ 35,711 | 88,604 |
Restricted Stock Awards [Member] | ||
Stock-Based Compensation (Textual) | ||
Stock-based compensation expense | $ 111,825 | $ 205,771 |
Stock option cancellation, description | On March 3, 2016, the Company entered into a restricted stock cancellation and release agreement with Clifford Lerner, the Company’s Chairman of the Board of Directors, pursuant to which the Company cancelled a grant of 5,000,000 restricted shares of common stock awarded to Mr. Lerner on April 10, 2013 that would have vested 50% on the third anniversary of the date of grant and 50% on the fourth anniversary of the date of grant. Subsequently, on March 3, 2016, the Board of Directors awarded Mr. Lerner a replacement award of 5,000,000 restricted shares that vest 100% on the (10th) tenth anniversary of the date of grant, provided Mr. Lerner is providing services to the Company on such date. | |
Unrecognized compensation expense | $ 828,728 | |
Weighted average expected recognition period of compensation cost not yet recognized | 10 years | |
Unvested Restricted Stock Awards [Member] | ||
Stock-Based Compensation (Textual) | ||
Total unrecognized compensation expenses | $ 2,260,256 | |
Weighted average expected recognition period of compensation cost not yet recognized | 7 years 9 months 15 days |
Common Stock Warrants (Details
Common Stock Warrants (Details Textual) - USD ($) | 1 Months Ended | |
Feb. 13, 2015 | Mar. 31, 2016 | |
Common Stock Warrants (Textual) | ||
Warrants expiration date | Feb. 13, 2020 | |
Warrants exercise price | $ 0.35 | |
Fair value of warrants | $ 680,000 | |
Sigma [Member] | ||
Common Stock Warrants (Textual) | ||
Warrant issued to purchase common stock | 4,500,000 | |
Sigma II [Member] | ||
Common Stock Warrants (Textual) | ||
Warrant issued to purchase common stock | 10,500,000 |
Net Loss Per Share of Common 49
Net Loss Per Share of Common Stock (Details Textual) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Option and Warrants [Member] | ||
Earnings (Loss) Per Share of Common Stock (Textual) | ||
Shares issuable excluded from computation of diluted net loss per share | 49,092,578 | 46,699,753 |
Commitments (Details)
Commitments (Details) | Feb. 04, 2015USD ($) | Oct. 31, 2014Agreement | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2013USD ($) | Nov. 30, 2015USD ($) | Feb. 28, 2015USD ($) |
Commitments (Textual) | |||||||
Security deposit | $ 3,751 | $ 200,659 | |||||
Expiration date of lease | Mar. 4, 2022 | ||||||
Monthly office rent payments on operating lease | $ 26,000 | ||||||
Office Space [Member] | |||||||
Commitments (Textual) | |||||||
Rent expense | $ 82,551 | $ 27,517 | |||||
HP [Member] | |||||||
Commitments (Textual) | |||||||
Number of lease agreements cancelled | Agreement | 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 expense for capital leases | 18,217 | 18,217 | |||||
Rent payments for equipment under capital leases | 22,734 | 22,734 | |||||
Equinix [Member] | |||||||
Commitments (Textual) | |||||||
Monthly recurring fees | $ 8,450 | ||||||
Nonrecurring fees | $ 9,700 | ||||||
Description of renewal of service agreement | Agreement automatically renews for additional twelve month terms unless earlier terminated by either party. | ||||||
Hosting expense | $ 15,531 | $ 46,549 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Mar. 03, 2016 | Jan. 31, 2016 | Sep. 30, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2013 | Mar. 31, 2016 | Mar. 31, 2015 |
Related Party Transactions (Textual) | ||||||||||||
Consulting expense | $ 11,000 | $ 35,000 | ||||||||||
Stock-based compensation expense | $ 153,774 | $ 229,863 | ||||||||||
Common stock exercise price | $ 0.20 | |||||||||||
Right to purchase of common stock | 50,000 | |||||||||||
Cash payment | $ 25,000 | |||||||||||
Agreement renewal description | The agreement was subsequently amended to provide for automatically renewing one year terms unless either party provides written notice of non-renewal. | |||||||||||
Mr. 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 | |||||||||||
Mr. Lerner [Member] | Issuance One [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Issuance of restricted shares of common stock | 325,000 | |||||||||||
Mr. Lerner [Member] | Issuance Two [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Issuance of restricted shares of common stock | 600,000 | |||||||||||
Mr. 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 | |||||
Darrell Lerner [Member] | ||||||||||||
Related Party Transactions (Textual) | ||||||||||||
Reduction in monthly fee | $ 3,000 |