Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 14, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'MOBIVITY HOLDINGS CORP. | ' |
Entity Central Index Key | '0001447380 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 22,748,193 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets | ' | ' |
Cash | $1,773,122 | $2,572,685 |
Accounts receivable, net of allowance for doubtful accounts of $125,048 and $65,975, respectively | 353,459 | 280,667 |
Other current assets | 119,336 | 140,114 |
Total current assets | 2,245,917 | 2,993,466 |
Goodwill | 5,999,765 | 3,108,964 |
Intangible assets, net | 3,086,620 | 935,316 |
Other assets | 98,142 | 63,944 |
TOTAL ASSETS | 11,430,444 | 7,101,690 |
Current liabilities | ' | ' |
Accounts payable | 487,852 | 543,648 |
Accrued interest | 19,505 | 16,943 |
Accrued and deferred personnel compensation | 230,716 | 191,041 |
Deferred revenue and customer deposits | 188,574 | 136,523 |
Notes payable | 20,000 | 20,000 |
Derivative liabilities | 50,738 | 106,176 |
Other current liabilities | 22,447 | 36,372 |
Earn-out payable | 2,332,000 | 34,755 |
Total current liabilities | 3,351,832 | 1,085,458 |
Earn-out payable | ' | 24,245 |
Total non-current liabilities | ' | 24,245 |
Total liabilities | 3,351,832 | 1,109,703 |
Stockholders' equity | ' | ' |
Common stock, $0.001 par value; 50,000,000 shares authorized; 16,319,878 and 3,869,688 shares issued and outstanding | 22,238 | 16,320 |
Equity payable | 307,745 | 108,170 |
Additional paid-in capital | 60,965,807 | 54,452,697 |
Accumulated deficit | -53,217,178 | -48,585,200 |
Total stockholders' equity | 8,078,612 | 5,991,987 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $11,430,444 | $7,101,690 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheets Parenthetical | ' | ' |
Allowance for doubtful accounts | $125,048 | $65,975 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 22,237,762 | 16,319,878 |
Common stock, shares outstanding | 22,237,762 | 16,319,878 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | ' | ' | ' | ' |
Revenues | $1,044,254 | $1,035,952 | $3,057,360 | $3,149,555 |
Cost of revenues | 272,252 | 268,507 | 791,486 | 864,519 |
Gross margin | 772,002 | 767,445 | 2,265,874 | 2,285,036 |
Operating expenses | ' | ' | ' | ' |
General and administrative | 916,322 | 1,324,354 | 2,900,711 | 2,644,678 |
Sales and marketing | 828,333 | 1,491,563 | 2,723,979 | 3,289,904 |
Engineering, research, and development | 344,322 | 214,374 | 1,026,120 | 465,614 |
Depreciation and amortization | 116,309 | 89,133 | 300,273 | 181,262 |
Total operating expenses | 2,205,286 | 3,119,424 | 6,951,083 | 6,581,458 |
Loss from operations | -1,433,284 | -2,351,979 | -4,685,209 | -4,296,422 |
Other income/(expense) | ' | ' | ' | ' |
Interest income | 132 | 385 | 2,034 | 406 |
Interest expense | -883 | -807 | -2,563 | -6,347,360 |
Change in fair value of derivative liabilities | -2,354 | -51,913 | 55,438 | -3,865,511 |
Gain (loss) on adjustment in contingent consideration | ' | ' | ' | -193,464 |
Total other income/(expense) | -3,105 | -52,335 | 54,909 | -10,405,929 |
Loss before income taxes | -1,436,389 | -2,404,314 | -4,630,300 | -14,702,351 |
Income tax expense | -1,678 | ' | -1,678 | ' |
Net loss | ($1,438,067) | ($2,404,314) | ($4,631,978) | ($14,702,351) |
Net loss per share - basic and diluted | ($0.06) | ($0.15) | ($0.22) | ($1.69) |
Weighted average number of shares during the period - basic and diluted | 22,237,762 | 16,215,030 | 20,672,880 | 8,707,839 |
Consolidated_Statement_of_Stoc
Consolidated Statement of Stockholders' Equity (Deficit) (USD $) | Common Stock | Equity Payable | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Amount at Dec. 31, 2013 | $16,320 | $108,170 | $54,452,697 | ($48,585,200) | $5,991,987 |
Beginning balance, Shares at Dec. 31, 2013 | 16,319,878 | ' | ' | ' | ' |
Issuance of common stock for financing, net of transaction costs of $435,871, Amount | 5,413 | ' | 4,971,717 | ' | ' |
Issuance of common stock for financing, net of transaction costs of $435,871, Shares | 5,413,000 | ' | ' | ' | ' |
Issuance of common stock for acquisition, Amount | 505 | ' | 672,000 | ' | ' |
Issuance of common stock for acquisition, Shares | 504,884 | ' | ' | ' | ' |
Stock based compensation | ' | 199,575 | 9,393 | ' | ' |
Net loss | ' | ' | ' | -4,631,978 | -4,631,978 |
Ending balance, Amount at Sep. 30, 2014 | $22,238 | $307,475 | $60,965,807 | ($53,217,178) | $8,078,612 |
Ending balance, Shares at Sep. 30, 2014 | 22,237,762 | ' | ' | ' | ' |
Consolidated_Statement_of_Stoc1
Consolidated Statement of Stockholders' Equity (Deficit) (Parenthetical) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Consolidated Statement Of Stockholders Equity Deficit Parenthetical | ' |
Transaction costs | $435,871 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
OPERATING ACTIVITIES | ' | ' | ' |
Net loss | ($4,631,978) | ($14,702,351) | ' |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' | ' |
Bad debt expense | 37,687 | 10,843 | ' |
Common stock payable for services | 199,575 | 86,006 | ' |
Stock-based compensation | 869,394 | 2,349,832 | ' |
Depreciation and amortization expense | 300,273 | 181,262 | ' |
Gain (loss) on adjustment in contingent consideration | ' | 193,465 | ' |
Change in fair value of derivative liabilities | -55,438 | 3,865,511 | ' |
Amortization of note discounts | ' | 6,134,367 | ' |
Increase (decrease) in cash resulting from changes in: | ' | ' | ' |
Accounts receivable | 51,185 | -71,125 | ' |
Other current assets | 20,778 | -88,091 | ' |
Other assets | -8,290 | 27,999 | ' |
Accounts payable | -55,797 | 624 | ' |
Accrued interest | 2,562 | 64,535 | ' |
Deferred revenue - related party | 39,675 | -90,795 | ' |
Accrued and deferred personnel compensation | ' | -35,262 | ' |
Deferred revenue and customer deposits | -139,510 | -8,309 | ' |
Other liabilities | -13,925 | -3,325 | ' |
Net cash used in operating activities | -3,383,809 | -2,084,814 | ' |
INVESTING ACTIVITIES | ' | ' | ' |
Purchases of equipment | -24,865 | -2,799 | ' |
Acquisitions | -2,368,019 | -400,000 | ' |
Net cash used in investing activities | -2,392,884 | -402,799 | ' |
FINANCING ACTIVITIES | ' | ' | ' |
Proceeds from issuance of notes payable, net of finance offering costs | ' | 700,000 | 700,000 |
Payments on notes payable | ' | -1,609,682 | -1,609,682 |
Proceeds from issuance of common stock, net of issuance costs | 4,977,130 | 6,897,177 | ' |
Net cash provided by financing activities | 4,977,130 | 5,987,495 | ' |
Net change in cash | -799,563 | 3,499,882 | ' |
Cash at beginning of period | 2,572,685 | 363 | 363 |
Cash at end of period | 1,773,122 | 3,500,245 | 2,572,685 |
Cash paid during period for: | ' | ' | ' |
Interest | 2,563 | 146,973 | ' |
Non-cash investing and financing activities: | ' | ' | ' |
Debt discount from derivatives | ' | 4,614,714 | ' |
Adjustment to derivative liability due to note repayment | ' | 40,511 | ' |
Adjustment to derivative liability due to note conversion | ' | 10,726,967 | ' |
Adjustment to derivative liability due to Allonge / ASID conversion | ' | 349,694 | ' |
Adjustment to derivative liability due to non-employee warrant conversion | ' | 176,555 | ' |
Issuance of common stock for Boomtext earn-out | ' | 2,210,667 | ' |
Issuance of common stock for acquisitions | 672,505 | 1,296,060 | ' |
Issuance of comon stock for cashless exercise of warrants | ' | 23,904 | ' |
Issuance of common stock for accrued bonus | ' | 37,000 | ' |
Issuance of note payable for acquisition | ' | 1,365,096 | ' |
Earn-out payable recorded for acquisition | 2,273,000 | 224,000 | ' |
Conversion of notes payable into common stock | ' | 4,984,720 | ' |
Conversion of accrued interest into common stock | ' | 36978600.00% | ' |
Settlement of working capital asset related to the Boomtext acquisition | ' | $153,317 | ' |
Nature_of_Operations_and_Basis
Nature of Operations and Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Nature of Operations and Basis of Presentation | ' |
Mobivity Holdings Corp. (“Mobivity,” “we” or “us” or “the Company”) is in the business of developing and operating proprietary platforms over which resellers, brands and enterprises can conduct localized mobile marketing campaigns. Our proprietary platforms allow resellers, brands and enterprises to market their products and services to consumers through text messages sent directly to the consumers’ mobile phones, mobile smartphone applications, or other solutions driven from consumers’ mobile phones. We generate revenue by charging the resellers, brands and enterprises a per-message transactional fee, or through fixed or variable software licensing fees. | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 31, 2014. | |
In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of our condensed consolidated financial statements as of September 30, 2014, and for the three and nine months ended September 30, 2014 and 2013. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full year ending December 31, 2014. | |
On November 12, 2013, we filed an amendment to our articles of incorporation on file with the Nevada Secretary of State for purposes of (i) effecting a reverse split of the issued and outstanding shares of our common stock at a ratio of one share for every six shares outstanding prior to November 12, 2013 and (ii) decreasing the authorized shares of its common stock to 50,000,000 shares. The reverse stock split was effective as of November 12, 2013. The reverse stock split effected a proportional decrease in the number of shares of common stock issuable upon the exercise of our stock options and warrants outstanding immediately prior to the effective date of the reverse stock split, with a proportional increase in the exercise price. No fractional shares were issued as a result of the reverse stock split. In lieu of issuing fractional shares, we rounded all fractional interests resulting from the split up to the nearest whole number. All historical share information contained in this Quarterly Report on Form 10-Q gives effect to the reverse stock split. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||
Sep. 30, 2014 | |||
Notes to Financial Statements | ' | ||
Summary of Significant Accounting Policies | ' | ||
Principles of Consolidation | |||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated. | |||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates used are those related to stock-based compensation, the valuation of the derivative liabilities, asset impairments, the valuation and useful lives of depreciable tangible and certain intangible assets, the fair value of common stock used in acquisitions of businesses, the fair value of assets and liabilities acquired in acquisitions of businesses, and the valuation allowance of deferred tax assets. Management believes that these estimates are reasonable; however, actual results may differ from these estimates. | |||
Derivative Financial Instruments | |||
We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. | |||
We review the terms of the common stock, warrants and convertible debt we issue to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. | |||
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. | |||
The fair values of the derivatives are estimated using a Monte Carlo simulation model. The model utilizes a series of inputs and assumptions to arrive at a fair value at the date of inception and each reporting period. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates. | |||
Revenue Recognition and Concentrations | |||
Our “C4” Mobile Marketing and Customer Relationship Management (CRM) is a hosted solution. We generate revenue from licensing our software to clients in our software as a service (SaaS) model, and is principally derived from subscription fees from customers. The subscription fee is billed on a month to month basis with no contractual term and is collected by credit card or check. Revenue is recognized at the time that the services are rendered and the selling price is fixed with a set range of plans. We also generate revenue on with per-message and per-minute transactional fees, and customized professional services. We recognize license fees over the period of the contract, service fees as the services are performed, and per-message or per-minute transaction revenue when the transaction takes place. We recognize revenue at the time that the services are rendered, the selling price is fixed, and collection is reasonably assured, provided no significant obligations remain. We consider authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting. For our SmartReceipt platform, which is a hosted solution, revenue is principally derived from subscription fees from customers. The subscription fee is billed on a month to month basis with primarily no contractual term and is collected by cash. Cash received in advance of the performance of services is recorded as deferred revenue. | |||
We generate revenue from the Stampt App through customer agreements with business owners. Revenue is principally derived from monthly subscription fees which provide a license for unlimited use of the Stampt App by the business owners and their customers. The subscription fee is billed each month to the business owner. Revenue is recognized monthly as the subscription revenues are billed. There are no per-minute or transaction fees associated with the Stampt App. | |||
During the nine months ended September 30, 2014 and 2013, one customer accounted for 22% and 32%, respectively, of our revenues. | |||
Comprehensive Income (Loss) | |||
Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. We are required to record all components of comprehensive income (loss) in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on investments, are reported, net of their related tax effect, to arrive at comprehensive income (loss). For the three and nine months ended September 30, 2014 and 2013, the comprehensive loss was equal to the net loss. | |||
Net Loss Per Common Share | |||
Basic net loss per share excludes any dilutive effects of options, shares subject to repurchase and warrants. Diluted net loss per share includes the impact of potentially dilutive securities. During the three and nine months ended September 30, 2014 and 2013, we had securities outstanding which could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive. | |||
Reclassifications | |||
Certain amounts from prior periods have been reclassified to conform to the current period presentation. | |||
Recent Accounting Pronouncements | |||
Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following are a summary of recent accounting developments. | |||
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations. | |||
In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations. | |||
In February 2013, FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to: | |||
- | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and | ||
- | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. | ||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). | |||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 did not have a material impact on our financial position or results of operations. | |||
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on our financial position or results of operations. |
Acquisitions
Acquisitions | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Acquisitions | ' | ||||||||||||||||
SmartReceipt Acquisition | |||||||||||||||||
On March 12, 2014, the Company, entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with SmartReceipt, Inc., a Delaware corporation (“SmartReceipt”). The closing of the transactions under the Asset Purchase Agreement took place on March 12, 2014. Pursuant to the Asset Purchase Agreement, the Company acquired all of the assets of SmartReceipt in exchange for: (1) the Company’s payment at closing of $2.212 million of cash, net of a $150,000 loan made by the Company to SmartReceipt in January 2014; (2) the Company’s issuance of 504,884 shares of its $0.001 par value common stock; and (3) The Company’s earn-out payment of 200% of the “eligible revenue” of the Company over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of Company revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of Company revenue derived during the earn out period from the sale of Company products and services to the designated SmartReceipt clients, plus 50% of the Company revenue derived during the earn out period from the sale of SmartReceipt products and services to Company clients who are not designated SmartReceipt clients. The earn-out payment will be payable in common shares of the Company at the rate of $1.85 per share, which amount is based on the volume weighted average trading price of the Company’s common stock for the 90 trading days preceding the initial close of the transactions under the Asset Purchase Agreement. | |||||||||||||||||
Pursuant to the Asset Purchase Agreement, SmartReceipt has agreed that 50% of the shares issuable to SmartReceipt or its shareholders at the initial closing will be held back by the Company for a period of 12 months and will be subject to cancellation based on indemnification claims of the Company. | |||||||||||||||||
The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows: | |||||||||||||||||
Accounts receivable, net | $ | 161,664 | |||||||||||||||
Other assets | 6,620 | ||||||||||||||||
Customer relationships | 2,010,000 | ||||||||||||||||
Developed technology | 260,000 | ||||||||||||||||
Trade name | 176,000 | ||||||||||||||||
Goodwill | 2,890,801 | ||||||||||||||||
Total assets acquired | 5,505,085 | ||||||||||||||||
Liabilities assumed | (191,561 | ) | |||||||||||||||
Net assets acquired | $ | 5,313,524 | |||||||||||||||
The purchase price consists of the following: | |||||||||||||||||
Cash | $ | 2,368,019 | |||||||||||||||
Earn Out | 2,273,000 | ||||||||||||||||
Common stock | 672,505 | ||||||||||||||||
Total purchase price | $ | 5,313,524 | |||||||||||||||
The following information presents unaudited pro forma consolidated results of operations for the nine months ended September 30, 2014 as if the SmartReceipt acquisition described above had occurred on January 1, 2014. The following unaudited pro forma financial information gives effect to certain adjustments, including the increase in stock based compensation expense that had not been valued prior to acquisition. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results. | |||||||||||||||||
Mobivity Holdings Corp. | |||||||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Operations | |||||||||||||||||
For the nine months ended September 30, 2014 | |||||||||||||||||
Mobivity | SR | Pro forma adjustments | Pro forma combined | ||||||||||||||
Revenues | |||||||||||||||||
Revenues | $ | 3,057,360 | $ | 214,139 | $ | - | $ | 3,271,499 | |||||||||
Cost of revenues | 791,486 | 54,410 | - | 845,896 | |||||||||||||
Gross margin | 2,265,874 | 159,729 | - | 2,425,603 | |||||||||||||
Operating expenses | |||||||||||||||||
General and administrative | 2,900,711 | 231,084 | 4,230 | (a) | 3,136,025 | ||||||||||||
Sales and marketing | 2,723,979 | 60,077 | - | 2,784,056 | |||||||||||||
Engineering, research, and development | 1,026,120 | 139,649 | - | 1,165,769 | |||||||||||||
Depreciation and amortization | 300,273 | 403 | - | 300,676 | |||||||||||||
Total operating expenses | 6,951,083 | 431,213 | 4,230 | 7,386,526 | |||||||||||||
Loss from operations | (4,685,209 | ) | (271,484 | ) | (4,230 | ) | (4,960,923 | ) | |||||||||
Other income/(expense) | |||||||||||||||||
Interest income | 2,034 | - | - | 2,034 | |||||||||||||
Interest expense | (2,563 | ) | - | - | (2,563 | ) | |||||||||||
Change in fair value of derivative liabilities | 55,438 | - | - | 55,438 | |||||||||||||
Total other income/(expense) | 54,909 | - | - | 54,909 | |||||||||||||
Loss before income taxes | (4,630,300 | ) | (271,484 | ) | (4,230 | ) | (4,906,014 | ) | |||||||||
Income tax expense | (1,678 | ) | - | - | (1,678 | ) | |||||||||||
Net loss | $ | (4,631,978 | ) | $ | (271,484 | ) | $ | (4,230 | ) | $ | (4,907,692 | ) | |||||
Net loss per share - basic and diluted | $ | (0.22 | ) | $ | (0.24 | ) | |||||||||||
Weighted average number of shares during the period - basic and diluted | 20,672,880 | 20,299,303 | |||||||||||||||
Pro Forma Adjustments | |||||||||||||||||
The following pro forma adjustments are based upon the value of the tangible and intangible assets acquired as determined by an independent valuation firm. | |||||||||||||||||
(a) Represents stock based compensation in conjunction with the transaction. | |||||||||||||||||
The following information presents unaudited pro forma consolidated results of operations for the year ended December 31, 2013 as if the SmartReceipt acquisition described above had occurred on January 1, 2013. The following unaudited pro forma financial information gives effect to certain adjustments, including the increase in stock based compensation expense that had not been valued prior to acquisition. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition been consummated as of the date indicated, nor are they necessarily indicative of future operating results. | |||||||||||||||||
Mobivity Holdings Corp. | |||||||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Operations | |||||||||||||||||
For the year ended December 31, 2013 | |||||||||||||||||
Mobivity | SR | Pro forma adjustments | Pro forma combined | ||||||||||||||
Revenues | |||||||||||||||||
Revenues | $ | 4,093,667 | $ | 834,250 | $ | - | $ | 4,927,917 | |||||||||
Cost of revenues | 1,122,037 | 243,209 | - | 1,365,246 | |||||||||||||
Gross margin | 2,971,630 | 591,041 | - | 3,562,671 | |||||||||||||
Operating expenses | |||||||||||||||||
General and administrative | 3,416,850 | 211,271 | 446,094 | (a) | 4,074,215 | ||||||||||||
Sales and marketing | 3,469,383 | 339,615 | - | 3,808,998 | |||||||||||||
Engineering, research, and development | 824,653 | 644,330 | - | 1,468,983 | |||||||||||||
Depreciation and amortization | 270,579 | 3,970 | - | 274,549 | |||||||||||||
Goodwill impairment | 1,066,068 | - | - | 1,066,068 | |||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | |||||||||||||
Total operating expenses | 9,691,703 | 1,199,186 | 446,094 | 11,336,983 | |||||||||||||
Loss from operations | (6,720,073 | ) | (608,145 | ) | (446,094 | ) | (7,774,312 | ) | |||||||||
Other income/(expense) | |||||||||||||||||
Interest income | 747 | - | - | 747 | |||||||||||||
Interest expense | (6,348,186 | ) | (117,944 | ) | - | (6,466,130 | ) | ||||||||||
Change in fair value of derivative liabilities | (3,766,231 | ) | - | - | (3,766,231 | ) | |||||||||||
Gain on Debt Extinguishment | 103,177 | - | - | 103,177 | |||||||||||||
Gain on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | |||||||||||
Total other income/(expense) | (10,038,958 | ) | (117,944 | ) | - | (10,156,902 | ) | ||||||||||
Loss before income taxes | (16,759,031 | ) | (726,089 | ) | (446,094 | ) | (17,931,214 | ) | |||||||||
Income tax expense | - | - | - | - | |||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (726,089 | ) | $ | (446,094 | ) | $ | (17,931,214 | ) | |||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.61 | ) | |||||||||||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 11,116,891 | |||||||||||||||
Pro Forma Adjustments | |||||||||||||||||
The following pro forma adjustments are based upon the value of the tangible and intangible assets acquired as determined by an independent valuation firm. | |||||||||||||||||
(a) Represents stock based compensation in conjunction with the transaction. | |||||||||||||||||
Sequence Acquisition | |||||||||||||||||
In May 2013, the Company acquired certain assets of Sequence, LLC (“Sequence”) pursuant to an asset purchase agreement. Pursuant to the asset purchase agreement, we acquired all application software, URL’s, websites, trademarks, brands, customers and customer lists from Sequence. We assumed no liabilities of Sequence. | |||||||||||||||||
The purchase price consisted of: (1) $300,000 in cash; (2) 750,000 shares of our common stock valued based on the closing market price on the acquisition date at $183,750; and (3) twenty-four monthly earn-out payments consisting of 10% of the eligible monthly revenue subsequent to closing with a fair value of $224,000. | |||||||||||||||||
We completed the acquisition in furtherance of our strategy to acquire small, privately owned enterprises in the mobile marketing sector through an asset purchase structure. This acquisition was consistent with our purchase price model in which equity will represent most of the purchase price plus a small cash component and, in some cases, the assumption of specific liabilities. | |||||||||||||||||
The acquisition was accounted for as a business combination and we valued the assets acquired at their fair values on the date of acquisition. An independent valuation expert assisted us in determining these fair values. The assets of the acquired entity were recorded at their estimated fair values at the date of the acquisition. | |||||||||||||||||
The allocation of the purchase price to the assets acquired based upon fair value determinations was as follows: | |||||||||||||||||
Merchant relationships | $ | 181,000 | |||||||||||||||
Trade name | 76,000 | ||||||||||||||||
Developed technology | 71,000 | ||||||||||||||||
Goodwill | 379,750 | ||||||||||||||||
Total assets acquired | $ | 707,750 | |||||||||||||||
The purchase price consisted of the following: | |||||||||||||||||
Cash | $ | 300,000 | |||||||||||||||
Common stock | 183,750 | ||||||||||||||||
Earn-out payable | 224,000 | ||||||||||||||||
Total purchase price | $ | 707,750 | |||||||||||||||
Pro forma results of operations were not included due to the investment test not reaching the level of a significant acquisition. | |||||||||||||||||
Front Door Insights Acquisition | |||||||||||||||||
In May 2013, the Company acquired certain assets and liabilities of Front Door Insights, LLC (“FDI”), pursuant to an asset purchase agreement. The assets and liabilities acquired from FDI consisted of cash on hand, accounts receivable, all rights under all contracts other than excluded contracts, prepaid expenses, all technology and intellectual property rights, accounts payable, and obligations under a commercial lease. | |||||||||||||||||
The purchase price consisted of: (1) $100,000 in cash; (2) a non-interest bearing promissory note in the principal amount of $1,400,000, which was discounted by $34,904; and (3) 7,000,000 shares of our common stock valued based on the closing market price on the acquisition date at $1,112,310. | |||||||||||||||||
The asset purchase agreement included a working capital adjustment pursuant to which the number of shares issuable to FDI would be increased, or decreased, in the event the working capital of FDI exceeds, or is less than, $10,000, respectively, as of the closing. The working capital adjustment due to us is $1,552, and the parties determined to settle this amount in cash. | |||||||||||||||||
The asset purchase agreement contains customary representations, warranties and covenants by the parties, including each party’s agreement to indemnify the other against any claims or losses arising from their breach of the asset purchase agreement. FDI and its members have also agreed that for a period of three years following the closing not to engage in the business of providing interactive mobile marketing platforms or services or to solicit the pre-closing clients, vendors or employees of FDI, except in each case on our behalf. | |||||||||||||||||
We completed the acquisition in furtherance of our strategy to acquire small, privately owned enterprises in the mobile marketing sector through an asset purchase structure. This acquisition was consistent with our purchase price model in which equity will represent most of the purchase price plus a small cash component and, in some cases, the assumption of specific liabilities. | |||||||||||||||||
The acquisition was accounted for as a business combination and we valued all assets and liabilities acquired at their fair values on the date of acquisition. An independent valuation expert assisted us in determining these fair values. The assets and liabilities of the acquired entity were recorded at their estimated fair values at the date of the acquisition. | |||||||||||||||||
During the year ended December 31, 2013, we adjusted the liabilities assumed in the transaction, in accordance with the asset purchase agreement, from $162,886 to $46,219, which resulted in an increase in additional paid-in capital of $78,000 and a reduction of goodwill of $38,667. | |||||||||||||||||
The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows: | |||||||||||||||||
Cash | $ | 5,500 | |||||||||||||||
Accounts receivable | 27,467 | ||||||||||||||||
Contracts | 813,000 | ||||||||||||||||
Customer relationships | 22,000 | ||||||||||||||||
Developed technology | 96,000 | ||||||||||||||||
Non-compete agreement | 124,000 | ||||||||||||||||
Goodwill | 1,535,658 | ||||||||||||||||
Total assets acquired | 2,623,625 | ||||||||||||||||
Liabilities assumed | (46,219 | ) | |||||||||||||||
Net assets acquired | $ | 2,577,406 | |||||||||||||||
The purchase price consists of the following: | |||||||||||||||||
Cash | $ | 100,000 | |||||||||||||||
Promissory note, net | 1,365,096 | ||||||||||||||||
Common stock | 1,112,310 | ||||||||||||||||
Total purchase price | $ | 2,577,406 | |||||||||||||||
Goodwill_and_Purchased_Intangi
Goodwill and Purchased Intangibles | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Goodwill and Purchased Intangibles | ' | ||||||||||||||||
Goodwill | |||||||||||||||||
The carrying value of goodwill at September 30, 2014 and December 31, 2013 was $5,999,765 and $3,108,964, respectively. Goodwill at September 30, 2014 includes $2,890,801 recorded as a result an acquisition in March 2014. See Note 3. | |||||||||||||||||
Intangible assets | |||||||||||||||||
The following table presents details of our purchased intangible assets as of September 30, 2014 and December 31, 2013: | |||||||||||||||||
Balance at | Balance at | ||||||||||||||||
31-Dec-13 | Additions | Amortization | 30-Sep-14 | ||||||||||||||
Patents and trademarks | $ | 118,098 | $ | - | $ | (6,859 | ) | $ | 111,239 | ||||||||
Customer contracts | 541,528 | - | (75,097 | ) | 466,431 | ||||||||||||
Customer and merchant relationships | - | 2,010,000 | (111,306 | ) | 1,898,694 | ||||||||||||
Trade name | 22,391 | 176,000 | (17,012 | ) | 181,379 | ||||||||||||
Acquired technology | 182,298 | 260,000 | (62,386 | ) | 379,912 | ||||||||||||
Non-compete agreement | 71,001 | - | (22,036 | ) | 48,965 | ||||||||||||
$ | 935,316 | $ | 2,446,000 | $ | (294,696 | ) | $ | 3,086,620 | |||||||||
The intangible assets are being amortized on a straight line basis over their estimated useful lives of one to ten years. | |||||||||||||||||
During the nine months ended September 30, 2014, the following intangible assets were purchased with the following useful lives: | |||||||||||||||||
SmartReceipt, Inc.: | |||||||||||||||||
Fair value | Useful Life | ||||||||||||||||
Merchant relationships | $ | 2,010,000 | 10 years | ||||||||||||||
Trade name | $ | 176,000 | 10 years | ||||||||||||||
Developed technology | $ | 260,000 | 10 years | ||||||||||||||
Amortization expense for intangible assets was $114,228 and $87,081 for the three months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||
Amortization expense for intangible assets was $294,696 and $175,420 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||
The estimated future amortization expense of our intangible assets as of September 30, 2014 is as follows: | |||||||||||||||||
Year ending December 31, | Amount | ||||||||||||||||
2014 | $ | 114,232 | |||||||||||||||
2015 | 462,987 | ||||||||||||||||
2016 | 385,026 | ||||||||||||||||
2017 | 339,669 | ||||||||||||||||
2018 | 333,820 | ||||||||||||||||
Thereafter | 1,450,886 | ||||||||||||||||
Total | $ | 3,086,620 | |||||||||||||||
Derivative_Liabilities
Derivative Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
Derivative Liabilities | ' | ||||||||
Convertible notes payable and underlying warrants | |||||||||
As discussed in Note 6 under Bridge Financing, we previously issued convertible notes payable that provided for the issuance of warrants to purchase our common stock at a future date. The conversion term for the convertible notes was variable based on certain factors. The number of warrants to be issued was based on the future price of our common stock. | |||||||||
As of December 31, 2012 and through June 17, 2013, the number of warrants to be issued was indeterminate. Due to the fact that the number of warrants issuable was indeterminate, the equity environment was tainted and the fair value of all of the warrants underlying the convertible notes payable was recorded as a derivative liability. The fair values of the variable maturity conversion feature (“VMCO”) and the additional share issuance feature (“ASID”) were recorded as derivative liabilities on the issuance date. | |||||||||
On June 17, 2013, we converted all of the outstanding convertible notes payable into shares of our common stock, and issued the warrants underlying the convertible notes payable. At that time, the derivative liabilities related to the VMCO and ASID totaling $7,792,657 were reclassified to additional paid-in capital. | |||||||||
Private Placement Shares and Warrants | |||||||||
We completed a private placement in September 2011 for the sale of units consisting of shares of common stock and warrants to purchase our common stock. Both the common shares and the warrants contain anti-dilutive, or down round, price protection. We recorded derivative liabilities related to the down round price protection on the common shares and the warrants. | |||||||||
The down round price protection on the common shares expired in August 2012, and the down round price protection for the warrants terminates when the warrants expire or are exercised. | |||||||||
Allonge | |||||||||
As discussed in Note 6 under Bridge Financing, all note holders with convertible notes payable maturing in February 2012 extended the maturity date through May 2012. As consideration to the note holders for the extension of the maturity date, we provided allonges which consisted of the accrued interest on each convertible note payable as of January 31, 2012. The allonges were convertible into shares of common stock at the latest financing price. The value of the allonges was recorded as a derivative liability at the issuance date. | |||||||||
On June 17, 2013, the number of common shares issuable under the allonges was determined to be 527,679 and these shares were issued in July 2013. | |||||||||
Non-employee Warrants | |||||||||
As discussed in Note 7 under Warrants, we previously accounted for warrants issued to non-employees as derivative liabilities. On June 17, 2013, the equity environment was no longer tainted and the value of the derivative liabilities related to the non-employee warrants totaling $176,555 were reclassified to additional paid-in capital. | |||||||||
Summary | |||||||||
The fair values of our derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a Monte Carlo simulation discussed below. | |||||||||
At September 30, 2014 and December 31, 2013, we recorded current derivative liabilities of $50,738 and $106,176, respectively, which are detailed by instrument type in the table below. | |||||||||
The net change in fair value of the derivative liabilities for the three months ended September 30, 2014 and 2013 was a gain of $2,354 and a gain of $51,913, respectively. | |||||||||
The net change in fair value of the derivative liabilities for the nine months ended September 30, 2014 and 2013 was a loss of $55,438 and a gain of $3,865,511, respectively. | |||||||||
The following table presents the derivative liabilities by instrument type as of September 30, 2014 and December 31, 2013: | |||||||||
Derivative Value by Instrument Type | 30-Sep-14 | 31-Dec-13 | |||||||
Common Stock and Warrants | $ | 50,738 | $ | 106,176 | |||||
$ | 50,738 | $ | 106,176 | ||||||
The following table presents details of our derivative liabilities from December 31, 2013 to September 30, 2014: | |||||||||
Balance December 31, 2013 | $ | 106,176 | |||||||
Change in fair value of derivative liabilities | (55,438 | ) | |||||||
Balance September 30, 2014 | $ | 50,738 | |||||||
An independent valuation expert calculated the fair value of the compound embedded derivatives using a complex, customized Monte Carlo simulation model suitable to value path dependent American options. The model uses the risk neutral methodology adapted to value corporate securities. This model utilized subjective and theoretical assumptions that can materially affect fair values from period to period. | |||||||||
Key inputs and assumptions used in valuing our derivative liabilities are as follows: | |||||||||
For issuances of notes, common stock and warrants: | |||||||||
· | Stock prices on all measurement dates were based on the fair market value | ||||||||
· | Down round protection is based on the subsequent issuance of common stock at prices less than $1.00 per share and warrants with exercise prices less than $1.00 per share | ||||||||
· | The probability of a future equity financing event triggering the down round protection was estimated at 0% | ||||||||
· | Computed volatility of 97.6% - 115.5% | ||||||||
· | Risk free rate of 0.13% - 0.21% | ||||||||
Bridge_Financing_Notes_Payable
Bridge Financing, Notes Payable, and Accrued Interest | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Bridge Financing, Notes Payable, and Accrued Interest | ' | ||||||||||||||||
Bridge Financing | |||||||||||||||||
Summary | |||||||||||||||||
Prior to June 2013, we issued 10% Senior Secured Convertible Bridge Notes Payable (“Bridge Notes” or “new Bridge Notes”) to various accredited investors, and then extended the due dates on the majority of the Bridge Notes several times. In June 2013, the outstanding principal of the Bridge Notes totaling $4,984,720 was converted into 24,923,602 shares of our common stock at $0.20 per share. We no longer have any outstanding Bridge Notes. | |||||||||||||||||
The Bridge Notes contained variable maturity dates and additional share issuance obligations and we recorded discounts to the Bridge Notes for the VMCO and ASID. The discounts were amortized to interest expense over the term of the Bridge Notes using the effective interest method. We determined that the VMCO and the ASID represented embedded derivative features, and these were recorded as derivative liabilities. See Note 5. | |||||||||||||||||
We capitalized costs associated with the issuance of the Bridge Notes, and amortized these costs to interest expense over the term of the related Bridge Notes using the effective interest method. | |||||||||||||||||
The outstanding balances of the bridge notes at September 30, 2014 and December 31, 2013 were $0 and $0, respectively. | |||||||||||||||||
Following is a detailed discussion of the Bridge Notes transactions. | |||||||||||||||||
2012 | |||||||||||||||||
As of January 1, 2012, the principal balance on our outstanding Bridge Notes totaled $1,062,500. The principal balance and accrued interest was due on the earlier of (i) the date we completed a financing transaction for the offer and sale of shares of common stock (including securities convertible into or exercisable for its common stock), in an aggregate amount of no less than 125% of the principal amount (a qualifying financing), and (ii) February 2, 2012. If the Bridge Notes were held to maturity, we would have paid, at the option of the holder: i) in cash or ii) in securities to be issued by us in the qualifying financing at the same price paid by other investors. The Bridge Notes were secured by a first priority lien and security interest in all of our assets. | |||||||||||||||||
In January 2012, we issued additional Bridge Notes in the aggregate principal amount of $520,000. These Bridge Notes were due February 2, 2012 and contained the same rights and privileges as the previously issued Bridge Notes. | |||||||||||||||||
In March 2012, we repaid Bridge Notes totaling $65,000. | |||||||||||||||||
In April 2012, all note holders with Bridge Notes maturing on February 2, 2012 extended the maturity date through May 2, 2012. As consideration to the note holders for the extension of the maturity date, we provided allonges which consisted of the accrued interest for each Bridge Note as of January 31, 2012, which are convertible into shares of our common stock at the latest financing price. The value of the allonges was recorded as a derivative liability. See Note 5. | |||||||||||||||||
In March 2012 and April 2012, we issued additional Bridge Notes in the aggregate principal amount of $220,100 with a due date of May 2, 2012. In May 2012, these notes were cancelled and converted into new Bridge Notes discussed below. | |||||||||||||||||
In May and June 2012, we issued to a number of accredited investors our new Bridge Notes in the aggregate principal amount of $4,347,419, consisting of (i) $2,656,250 of new funds and (ii) $1,691,169 of principal amount and accrued interest due under our previously issued Bridge Notes that were cancelled and converted into new Bridge Notes. The new Bridge Notes accrued interest at the rate of 10% per annum. | |||||||||||||||||
The principal amount under the new Bridge Notes plus all accrued and unpaid interest was due on the earlier of (i) the date we completed a financing transaction for the offer and sale of shares of common stock (including securities convertible into or exercisable for its common stock), in an aggregate amount of no less than 125% of the principal amount (a qualifying financing), and (ii) October 15, 2012, which date, as described below, was later extended to April 15, 2013. Payments could have been made in cash, or, at the option of the holder of the new Bridge Notes, in securities to be issued by us in the qualifying financing at the same price paid for such securities by other investors. The new Bridge Notes were secured by a first priority lien and security interest in all of our assets. | |||||||||||||||||
We also had the obligation to issue to the holders of the new Bridge Notes on the date that is the earlier of the repayment of the new Bridge Notes or the completion of the qualifying financing, at their option: | |||||||||||||||||
● | five year warrants to purchase that number of shares of common stock equal to the principal amount plus accrued interest divided by the per share purchase price of the common stock offered and sold in the qualifying financing (the offering price) which warrants were to be exercisable at the offering price and would include cashless exercise provisions commencing eighteen months from the date of issuance of the warrants if there is not at that time an effective registration statement covering the shares of common stock exercisable upon exercise of the warrants, or | ||||||||||||||||
● | that number of shares of common stock equal to the product arrived at by multiplying (x) the principal amount plus accrued interest divided by the offering price and (y) 0.33. | ||||||||||||||||
We granted piggy-back registration rights with respect to the securities to be issued in connection with the new Bridge Notes. | |||||||||||||||||
The new Bridge Notes further provided that in the event of a change of control transaction, the proceeds from such transaction must be used by us to pay to the holders of the new Bridge Notes, pro rata based on the amount of new Bridge Notes owned by each holder, an amount equal to 1.5 times the amount of the aggregate principal amount outstanding under the new Bridge Notes, plus accrued interest due there under, plus all other fees, costs or other charges due there under. | |||||||||||||||||
The holders of the new Bridge Notes were also granted the right to appoint two designees to serve as members of our board of directors, which members will also serve as members of the Compensation Committee and the Audit Committee of our board of directors. | |||||||||||||||||
We used $184,081 from the proceeds of the sale of the new Bridge Notes to pay off existing principal balances under the Bridge Notes that were not cancelled and converted into the new Bridge Notes. | |||||||||||||||||
In October 2012 and continuing thereafter, we entered into amendments with the holders the new Bridge Notes. Under the terms of the amendments, the holders of new Bridge Notes in the aggregate principal amount of $4,342,419 agreed to extend the maturity date of the new Bridge Notes to April 15, 2013. In consideration of the new Bridge Note holders’ agreement to extend the maturity date, the amendment provides that the holder shall have the option to convert the principal and interest under the new Bridge Note into the securities offered by us in a qualifying equity financing at the lower of (a) the same price paid for such securities by other investors investing in the financing or (b) $0.50 per share (subject to adjustment in the event of a stock split, reclassification or the like). Prior to the amendment, the conversion option under the new Bridge Note entitled the holder to convert the principal and interest under the new Bridge Note into the securities offered by us in a qualifying equity financing at the same price paid for such securities by other investors investing in the financing. The conversion price of $0.50 in (b) above triggered the price protection guarantee contained in the warrants issued in our 2011 private placement, and the exercise price on the warrants changed from $2.00 per share to $0.50 per share. | |||||||||||||||||
In November 2012, we repaid a new Bridge Note totaling $5,000. | |||||||||||||||||
2013 | |||||||||||||||||
In January 2013, we partially repaid a new Bridge Note totaling $21,040. | |||||||||||||||||
In March 2013, we issued new Bridge Notes in the aggregate principal amount of $200,000 that contained the same rights and privileges as the previously issued new Bridge Notes. | |||||||||||||||||
In April 2013, we issued new Bridge Notes in the aggregate principal amount of $75,000 that contained the same rights and privileges as the previously issued new Bridge Notes. | |||||||||||||||||
In April 2013, we repaid a new Bridge Note totaling $36,659. | |||||||||||||||||
In April 2013, we issued a new Bridge Note to our Chief Financial Officer (“CFO”) totaling $20,000 that contained the same rights and privileges as the previously issued new Bridge Notes, the due date of which was extended to October 15, 2013. | |||||||||||||||||
In May 2013, a majority of the new Bridge Note holders agreed to extend the maturity date of the new Bridge Notes to October 15, 2013 from April 15, 2013. In consideration of the new Bridge Note holders’ agreement to extend the maturity date, the amendment provides that the new Bridge Note holders have the option to convert the principal and accrued interest under the new Bridge Note into the securities offered by us in a qualifying equity financing at the lower of (a) the same price paid for such securities by other investors investing in the financing or (b) $0.25 per share (subject to adjustment in the event of a stock split, reclassification or the like). Prior to the amendment, the conversion option under the new Bridge Notes entitled the new Bridge Note holders to convert the principal and accrued interest under the new Bridge Notes into the securities offered by us in a qualifying equity financing at the lower of (a) the same price paid for such securities by other investors investing in the financing or (b) $0.50 per share (subject to adjustment in the event of a stock split, reclassification or the like). | |||||||||||||||||
As a result of this amendment and the additional consideration given, the embedded derivative features in the Bridge Notes were revalued on April 15, 2013 to $4,052,148. We recorded new note discounts and derivative liabilities on April 15, 2013 based on the fair value of the derivative instruments. During the period from April 15, 2013 through June 17, 2013, the entire balance of the note discounts was amortized to interest expense as the conversion on June 17, 2013 triggered the immediate recognition of the full value of the debt discount. | |||||||||||||||||
In May 2013, we issued new Bridge Notes in the aggregate principal amount of $387,500 that contained the same rights and privileges as the previously issued and amended new Bridge Notes. | |||||||||||||||||
In May 2013, we issued a new Bridge Note to our Chief Executive Officer (“CEO”) totaling $17,500 that contained the same rights and privileges as the previously issued and amended new Bridge Notes. | |||||||||||||||||
In June 2013, we completed a qualifying equity financing at $0.20 per share. See Note 7. Pursuant to the terms of the new Bridge Notes, we converted the principal amount of Bridge Notes totaling $4,984,720 into 24,923,602 shares of our common stock at $0.20 per share. Also, in June 2013, we converted accrued interest on the Bridge Notes totaling $369,786 into 1,848,930 shares of our common stock at $0.20 per share. | |||||||||||||||||
Certain note holders elected to receive cash payment for their accrued interest, and the remaining accrued interest on the Bride Notes of $95,404 was paid in July 2013. | |||||||||||||||||
Discounts recorded related to the Bridge Notes | |||||||||||||||||
We recorded discounts to the Bridge Notes for the VMCO and ASID. The discounts were amortized to interest expense over the term of the Bridge Notes using the effective interest method. All of the discounts related to the Bridge Notes were recognized as interest expense in June 2013 in conjunction with the conversion of the Bridge Notes into shares of our common stock. | |||||||||||||||||
We determined that the VMCO and the ASID represented embedded derivative features, and these were shown as derivative liabilities on the balance sheet. See Note 5. | |||||||||||||||||
The following table presents details of the discounts to our Bridge Notes from December 31, 2012 to September 30, 2014: | |||||||||||||||||
VMCO | ASID | Total | |||||||||||||||
31-Dec-12 | $ | (481,390 | ) | $ | (1,003,359 | ) | $ | (1,484,749 | ) | ||||||||
Additions | (1,936,191 | ) | (2,678,523 | ) | (4,614,714 | ) | |||||||||||
Amortization | 2,417,581 | 3,681,882 | 6,099,463 | ||||||||||||||
31-Dec-13 | $ | - | $ | - | $ | - | |||||||||||
Additions | - | - | - | ||||||||||||||
Amortization | - | - | - | ||||||||||||||
30-Sep-14 | $ | - | $ | - | $ | - | |||||||||||
During the three months ended September 30, 2014 and 2013, we recorded Bridge Note discount amortization to interest expense of $-0- and $-0-, respectively. | |||||||||||||||||
During the nine months ended September 30, 2014 and 2013, we recorded Bridge Note discount amortization to interest expense of $-0- and $6,099,463, respectively. | |||||||||||||||||
Cherry Family Trust Note | |||||||||||||||||
This note was issued on March 1, 2007, for the principal amount of $20,000; interest accrues at the rate of 9% compounded annually, with a maturity date of December 31, 2008. | |||||||||||||||||
Accrued interest was $19,505 and $16,943 as of September 30, 2014 and December 31, 2013, respectively. The note is currently past due. | |||||||||||||||||
Digimark, LLC Notes | |||||||||||||||||
As partial consideration for the acquisition of Boomtext in 2011, we issued an unsecured subordinated promissory note in the principal amount of $194,658. The promissory note did not bear interest, was payable in installments (varying in amount) from August 2011 through October 2012, and was subordinated to our obligations under the Bridge Notes discussed above. | |||||||||||||||||
We recorded the promissory note at the present value of the payments over the subsequent periods which amounted to $182,460. We amortized the discount using the effective interest method. | |||||||||||||||||
As of September 30, 2014 and December 31, 2013, the outstanding balances on the note payable were both $0. | |||||||||||||||||
Summary of Notes Payable and Accrued Interest | |||||||||||||||||
The following table summarizes our notes payable and accrued interest as of September 30, 2014 and December 31, 2013: | |||||||||||||||||
Notes Payable | Accrued Interest | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | 30-Sep-14 | 31-Dec-13 | ||||||||||||||
Unsecured (as amended) note payable due to our Company’s former Chief Executive Officer, interest accrues at the rate of 9% compounded annually, all amounts due and payable December 31, 2008. Currently past due. | 20,000 | 20,000 | 19,505 | 16,943 | |||||||||||||
Notes payable | 20,000 | 20,000 | 19,505 | 16,943 | |||||||||||||
Totals | $ | 20,000 | $ | 20,000 | $ | 19,505 | $ | 16,943 | |||||||||
Interest Expense | |||||||||||||||||
The following table summarizes interest expense for the three months ended September 30, 2014 and 2013, and the nine months ended September 30, 2014 and 2013: | |||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Amortization of note discounts | $ | - | $ | - | $ | - | $ | 6,134,367 | |||||||||
Amortization of deferred financing costs | - | - | - | - | |||||||||||||
Other interest expense | 883 | 807 | 2,563 | 212,993 | |||||||||||||
$ | 883 | $ | 807 | $ | 2,563 | $ | 6,347,360 | ||||||||||
Stockholders_Equity_Deficit
Stockholdersb Equity (Deficit) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Stockholders' Equity (Deficit) | ' | ||||||||||||||||
Common Stock | |||||||||||||||||
In March 2014 we issued 504,884 shares of common stock as part of the purchase price in the SmartReceipt acquisition which were valued at $672,505 based on the closing market price on the acquisition date, see Note 3. | |||||||||||||||||
In March 2014 we issued 5,413,000 units of our securities at a price of $1.00 per unit, for net proceeds of $4,977,130 (gross proceeds of $5,413,000 less financing costs of $435,870). Each unit consisted of one share of common stock and one warrant with an exercise price of $1.20. | |||||||||||||||||
At September 30, 2014, we had 22,237,762 shares of common stock outstanding. | |||||||||||||||||
Equity Payable | |||||||||||||||||
We had an earn-out commitment associated with the acquisition of Boomtext from Digimark, LLC. The earn-out payment (payable March 31, 2013) consisted of a number of shares of our common stock equal to (a) 1.5, multiplied by our net revenue from acquired customers and customer prospects for the twelve-month period beginning six months after the closing date, divided by (b) the average of the volume-weighted average trading prices of our common stock for the 25 trading days immediately preceding the earn-out payment (subject to a collar of $1.49 and $2.01 per share). | |||||||||||||||||
In June 2013, the final value of the earn-out payment of $2,210,667 was satisfied through the issuance of 1,483,669 shares of common stock. As of December 31, 2012, the estimated value of the earn-out payment of $2,032,881 was recorded as a current liability. | |||||||||||||||||
In June 2013, we recorded equity payable of $218,446 related to the additional share issuance obligations under the Bridge Notes. As discussed above under Common Stock and below under Warrants Issued to Note Holders and Placement Agent, we satisfied a portion of these obligations during the three months ended September 30, 2013 through the issuance of shares of common stock or warrants to purchase common stock. | |||||||||||||||||
In July 2014 we recorded a common stock payable of $199,575 related to Restricted Stock Units as compensation to non-exectutive directors. The grants were intended as compensation to non-executive directors for the calendar year 2014, or proportional service thereof. The number of shares was arrived at by dividing $65,000 intended for full year compensation divided by the closing stock price on date of grant, or $1.15. One director was granted an additional 25% in Restricted Stock Units for service as Lead Director for calendar year 2014. All of the Restricted Stock units vest as follows: 50% on date of grant, July 17th, 25% on September 30, 2014, and 25% on December 31, 2014, subject to director’s continued service on the Board through each vesting date. The distribution of these shares will be the earlier of a date chosen by each director as drafted into the RSU agreement, a change in control of the Corporation, or the departure of the director from the Board. The total grant was 231,931 units, of which 75% or 173,543 are vested as of the quarter ended September 30, 2014. | |||||||||||||||||
Stock-based Plans | |||||||||||||||||
Stock Option Activity | |||||||||||||||||
The following table summarizes stock option activity for the nine months ended September 30, 2014: | |||||||||||||||||
Options | |||||||||||||||||
Outstanding at December 31, 2013 | 5,672,464 | ||||||||||||||||
Granted | 898,500 | ||||||||||||||||
Exercised | - | ||||||||||||||||
Canceled/forfeited/expired | (905,933 | ) | |||||||||||||||
Outstanding at September 30, 2014 | 5,665,031 | ||||||||||||||||
The weighted average exercise price of stock options granted during the period was $1.02 and the related weighted average grant date fair value was $0.92 per share. | |||||||||||||||||
On February 27, 2014 the Company granted one employee 180,000 options to purchase shares of Company common stock at the closing price as of February 27, 2014 of $1.40 per share. The options vest 25% on the first anniversary of grant, then equally in monthly installments thereafter, and are exercisable until February 27, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.26 was $226,800. | |||||||||||||||||
On April 2, 2014 the Company granted two employees 200,000 options to purchase shares of Company common stock at the closing price as of April 15, 2014 of $1.32 per share. The options equally in monthly installments over 48 months, and are exercisable until April 2, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.19 was $238,000. | |||||||||||||||||
On April 15, 2014 the Company granted seven employees 18,500 options to purchase shares of Company common stock at the closing price as of April 15, 2014 of $1.44 per share. The options equally in monthly installments over 48 months, and are exercisable until April 15, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.30 was $24,050. | |||||||||||||||||
On April 15, 2014 the Company granted two employees 5,000 options to purchase shares of Company common stock at the closing price as of April 15, 2014 of $1.44 per share. The options vest 25% on the first anniversary of grant, then equally in monthly installments thereafter, and are exercisable until April 15, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.30 was $6,500. | |||||||||||||||||
On August 11, 2014 the Company granted five employees 312,500 options to purchase shares of the Company common stock at the closing price as of August 11, 2014 of $0.94 per share. The options vest 25% on the first anniversary of grant, then equally in monthly installments thereafter, and are exercisable until August 11, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $0.85 was $265,625. | |||||||||||||||||
On September 29, 2014 the Company granted seven employees 182,500 options to purchase shares of the Company common stock at the closing price as of September 29, 2014 of $1.15 per share. The options vest 25% on the first anniversary of grant, then equally in monthly installments thereafter, and are exercisable until September 29, 2024. The total estimated value using the Black-Scholes Model, based on a volatility rate of 132% and a call option value of $1.04 was $189,800. | |||||||||||||||||
Stock-Based Compensation Expense | |||||||||||||||||
The impact on our results of operations of recording stock-based compensation expense for the three and nine months ended September 30, 2014 and 2013 was as follows: | |||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
General and administrative | $ | 311,047 | $ | 386,347 | $ | 925,383 | $ | 662,509 | |||||||||
Sales and marketing | 29,258 | 656,396 | 116,733 | 1,656,052 | |||||||||||||
Engineering, research, and development | 16,588 | 3,081 | 26,852 | 5,056 | |||||||||||||
$ | 356,892 | $ | 1,045,824 | $ | 1,068,968 | $ | 2,323,618 | ||||||||||
Valuation Assumptions | |||||||||||||||||
An independent valuation expert calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were used for the nine months ended September 30, 2014 and 2013. | |||||||||||||||||
Nine months ended | |||||||||||||||||
September 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Risk-free interest rate | 1.97 | % | 1.27 | % | |||||||||||||
Expected life (years) | 6.08 | 5.57 | |||||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Expected volatility | 132 | % | 131.89 | % | |||||||||||||
The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options. | |||||||||||||||||
The expected life of the stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards. | |||||||||||||||||
The dividend yield assumption is based on our history of not paying dividends and no future expectations of dividend payouts. | |||||||||||||||||
The expected volatility in 2014 is based on the historical publicly traded price of our common stock. The expected volatility prior to 2013 is based on the weighted average of the historical volatility of publicly traded surrogates in our peer group. | |||||||||||||||||
Warrants Issued to Non-Employees | |||||||||||||||||
We issued warrants to purchase 150,556 shares of common stock to non-employees in 2010 and 2011. Prior to June 17, 2013, the warrants were accounted for as derivative liabilities because the equity environment was tainted as discussed in Note 5. The equity environment was no longer tainted as of June 17, 2013, and our independent valuation expert began calculating the stock-based compensation for these warrants using the Black-Scholes valuation model. The valuation assumptions used are consistent with the valuation information for options above. | |||||||||||||||||
We recorded stock-based compensation expense of $1,155 in general and administrative expense for the three months ended September 30, 2014. | |||||||||||||||||
We recorded stock-based compensation expense of $4,625 in general and administrative expense for the nine months ended September 30, 2014. | |||||||||||||||||
A summary of non-employee warrant activity from December 31, 2013 to September 30, 2014 is presented below: | |||||||||||||||||
Number | |||||||||||||||||
Outstanding | |||||||||||||||||
Outstanding at December 31, 2013 | 150,556 | ||||||||||||||||
Granted | - | ||||||||||||||||
Exercised | - | ||||||||||||||||
Canceled/forfeited/expired | (555 | ) | |||||||||||||||
Outstanding at September 30, 2014 | 150,001 | ||||||||||||||||
Warrants | |||||||||||||||||
During 2011, we issued warrants for the purchase of 688,669 shares of common stock at $2.00 per share in connection with a private placement. During 2012, we issued warrants for the purchase of 153,515 shares of common stock at $2.00 per share in connection with the conversion of a portion of our Bridge Notes. These warrants are exercisable for four years from the date of issuance, and contain anti-dilution, or down round, price protection as long as the warrants remain outstanding. The current exercise price of these warrants is $0.20 per share as a result of the price protection guarantee contained in the warrant agreements. | |||||||||||||||||
In June 2013, we issued warrants for the purchase of 27,249,549 shares of common stock at $0.20 per share in connection with the conversion of the Bridge Notes into equity. The warrants are exercisable for five years from the date of issuance. | |||||||||||||||||
In June 2013, we issued warrants for the purchase of 3,602,558 shares of common stock at $0.20 per share to a placement agent connected with the Bridge Note conversions and equity placements. The warrants are exercisable for five years from the date of issuance. | |||||||||||||||||
In July 2013, we issued warrants for the purchase of 35,000 shares of common stock at $0.20 per share to a placement agent connected with the equity placements. The warrants are exercisable for five years from the date of issuance. | |||||||||||||||||
In July 2013, we issued warrants for the purchase of 152,300 shares of common stock at $0.20 per share to previous note holders in satisfaction of the ASID. The warrants are exercisable for three years from the date of issuance. | |||||||||||||||||
In July 2013, we issued warrants for the purchase of 53,069 shares of common stock at $0.20 per share to an individual for services rendered. | |||||||||||||||||
In July 2013, we recorded the cashless exercise of warrants for 51,167 shares of common stock, and issued 32,825 shares of common stock. | |||||||||||||||||
In August 2013, we issued warrants for the purchase of 32,900 shares of common stock at $0.20 per share to a placement agent connected with the Bridge Note conversions and equity placements. The warrants are exercisable for five years from the date of issuance. | |||||||||||||||||
In August 2013, we recorded the cashless exercise of warrants for 14,076 shares of common stock, and issued 9,986 shares of common stock. | |||||||||||||||||
In March 2014, we issued warrants for the purchase of 1,353,238 shares of common stock at $1.20 per share in connection with equity financing. | |||||||||||||||||
In March 2014, we issued warrants for the purchase of 370,686 common stock units at $1.00 per unit to a placement agent in connection with the equity placements. Each unit consists of one share of the Company’s common stock and a common stock purchase warrant to purchase one-quarter share of the Company’s common stock, over a five year period, at an exercise price of $1.20 per share. At March 31, 2014, the value of the 370,686 warrants was $448,705. As part of the private placement share units issued, 1,353,238 warrants were issued to investors valued at $1,320,569 which expire in 2019. | |||||||||||||||||
At September 30, 2014, we have warrants to purchase 7,112,499 shares of common stock at $1.20 per share that are outstanding. Of this amount, warrants to purchase 86,949 shares expire in 2015, warrants to purchase 55,598 shares expire in 2016, warrants to purchase 5,153,358 shares expire in 2018, and warrants to purchase 1,903,543 shares expire in 2019. | |||||||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the authoritative guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions. This hierarchy requires companies to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value, including our derivative liabilities. | |||||||||||||||||
The following table presents assets and liabilities that are measured and recognized at fair value as of September 30, 2014 on a recurring and non-recurring basis: | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | |||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 5,999,765 | $ | - | |||||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 3,200,851 | $ | - | |||||||||
Derivatives (recurring) | $ | - | $ | - | $ | 50,738 | $ | (55,438 | ) | ||||||||
Earn-out payable (non-recurring) | $ | - | $ | - | $ | 2,273,000 | $ | - | |||||||||
The following table presents assets and liabilities that are measured and recognized at fair value as of December 31, 2013 on a recurring and non-recurring basis: | |||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | |||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 3,108,964 | $ | 849,340 | |||||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 935,316 | $ | 491,204 | |||||||||
Derivatives (recurring) | $ | - | $ | - | $ | 106,176 | $ | (3,766,231 | ) | ||||||||
Earn-out payable (non-recurring) | $ | - | $ | - | $ | 59,000 | $ | (165,000 | ) | ||||||||
The change in fair value of these liabilities is included in other income (expense) in the condensed consolidated statements of operations. The assumptions used in the Monte-Carlo simulation used to value the derivative liabilities involve expected volatility in the price of our common stock, estimated probabilities related to the occurrence of a future financing, and interest rates. As all the assumptions employed to measure this liability are based on management’s judgment using internal and external data, this fair value determination is classified in Level 3 of the valuation hierarchy. | |||||||||||||||||
See Note 5 for a table that provides a reconciliation of the derivative liabilities from December 31, 2013 to September 30, 2014. | |||||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Commitments and Contingencies | ' |
Litigation | |
As of the date of this report, there are no pending legal proceedings to which we or our properties are subject, except for routine litigation incurred in the normal course of business. | |
Earn-Out Contingency | |
We have an earn-out commitment associated with the acquisition of SmartReceipt. The earn-out consists of 200% of the “eligible revenue” of the Company over the 12 month period following the close of the transaction (“earn-out period”). The “eligible revenue” will consist of: 100% of Company revenue derived during the earn out period from the sale of SmartReceipt products and services to certain SmartReceipt clients as of the close (the “designated SmartReceipt clients”); plus 50% of Company revenue derived during the earn out period from the sale of Company products and services to the designated SmartReceipt clients, plus 50% of the Company revenue derived during the earn out period from the sale of SmartReceipt products and services to Company clients who are not designated SmartReceipt clients. The earn-out payment will be payable in common shares of the Company at the rate of $1.85per share, which is based on (the volume weighted average trading price of the Company’s common stock for the 90 trading days preceding the initial close of the transactions under the Asset Purchase Agreement. | |
As of September 30, 2014, the estimated dollar value of the earn-out payable was $2,273,000. As of September 30, 2014, the earn-out payable was recorded as a current liability, due to its one year term, on the consolidated balance sheet. | |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Related Party Transactions | ' |
In April 2013, we issued a new Bridge Note to our CFO totaling $20,000 that contains the same rights and privileges as the previously issued new Bridge Notes, the due date of which was extended to October 15, 2013. The note and accrued interest were converted into 16,918 shares of common stock and he received five-year warrants to purchase 16,918 shares of common stock exercisable at $1.20 per share. | |
In May 2013, we issued a new Bridge Note to our CEO totaling $17,500 that contains the same rights and privileges as the previously issued and amended new Bridge Notes. The note and accrued interest were converted into 14,708 shares of common stock and he received five-year warrants to purchase 14,708 shares of common stock exercisable at $1.20 per share. | |
On June 17, 2013 the Company issued to Dennis Becker an option to purchase 1,251,979 shares of Company common stock. The exercise price of the option is $1.80, the fair market value on date of grant. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant. On June 17, 2013 the Company issued to Timothy Schatz an option to purchase 417,326 shares of Company common stock. The exercise price of the option is $1.80, the fair market value on date of grant. The options will vest and first become exercisable over a four year period at the rate of 1/48th shares per month commencing on the first month following the date of grant. | |
On March 12, 2014 several officers and directors participated in the Private Placement. Dennis Becker purchased 25,000 units at a price of $1.00 per unit, resulting in issuance of 25,000 common shares and 6,250 warrants with an exercise price of $1.20 per share. Michael Bynum purchased 25,000 units at a price of $1.00 per unit, resulting in issuance of 25,000 common shares and 6,250 warrants with an exercise price of $1.20 per share. David Jaques purchased 25,000 units at a price of $1.00 per unit, resulting in issuance of 25,000 common shares and 6,250 warrants with an exercise price of $1.20 per share. John Harris purchased 25,000 units at a price of $1.00 per unit, resulting in issuance of 25,000 common shares and 6,250 warrants with an exercise price of $1.20 per share. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
Subsequent Events | ' |
In October 2014 we issued 300,000 shares to Del Mar Consulting Group, and 200,000 shares to Alex Partners LLC as compensation for contracted investor relations services. | |
In October 2014 we issued 10,431 shares to Lytham Partners as compensation for contracted investor relations services. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||
Sep. 30, 2014 | |||
Summary Of Significant Accounting Policies Policies | ' | ||
Principles of Consolidation | ' | ||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated. | |||
Use of Estimates | ' | ||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates used are those related to stock-based compensation, the valuation of the derivative liabilities, asset impairments, the valuation and useful lives of depreciable tangible and certain intangible assets, the fair value of common stock used in acquisitions of businesses, the fair value of assets and liabilities acquired in acquisitions of businesses, and the valuation allowance of deferred tax assets. Management believes that these estimates are reasonable; however, actual results may differ from these estimates. | |||
Derivative Financial Instruments | ' | ||
We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. | |||
We review the terms of the common stock, warrants and convertible debt we issue to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. | |||
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. | |||
The fair values of the derivatives are estimated using a Monte Carlo simulation model. The model utilizes a series of inputs and assumptions to arrive at a fair value at the date of inception and each reporting period. Some of the key assumptions include the likelihood of future financing, stock price volatility, and discount rates. | |||
Revenue Recognition and Concentrations | ' | ||
Our “C4” Mobile Marketing and Customer Relationship Management (CRM) is a hosted solution. We generate revenue from licensing our software to clients in our software as a service (SaaS) model, and is principally derived from subscription fees from customers. The subscription fee is billed on a month to month basis with no contractual term and is collected by credit card or check. Revenue is recognized at the time that the services are rendered and the selling price is fixed with a set range of plans. We also generate revenue on with per-message and per-minute transactional fees, and customized professional services. We recognize license fees over the period of the contract, service fees as the services are performed, and per-message or per-minute transaction revenue when the transaction takes place. We recognize revenue at the time that the services are rendered, the selling price is fixed, and collection is reasonably assured, provided no significant obligations remain. We consider authoritative guidance on multiple deliverables in determining whether each deliverable represents a separate unit of accounting. For our SmartReceipt platform, which is a hosted solution, revenue is principally derived from subscription fees from customers. The subscription fee is billed on a month to month basis with primarily no contractual term and is collected by cash. Cash received in advance of the performance of services is recorded as deferred revenue. | |||
We generate revenue from the Stampt App through customer agreements with business owners. Revenue is principally derived from monthly subscription fees which provide a license for unlimited use of the Stampt App by the business owners and their customers. The subscription fee is billed each month to the business owner. Revenue is recognized monthly as the subscription revenues are billed. There are no per-minute or transaction fees associated with the Stampt App. | |||
During the nine months ended September 30, 2014 and 2013, one customer accounted for 22% and 32%, respectively, of our revenues. | |||
Comprehensive Income (Loss) | ' | ||
Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. We are required to record all components of comprehensive income (loss) in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on investments, are reported, net of their related tax effect, to arrive at comprehensive income (loss). For the three and nine months ended September 30, 2014 and 2013, the comprehensive loss was equal to the net loss. | |||
Net Loss Per Common Share | ' | ||
Basic net loss per share excludes any dilutive effects of options, shares subject to repurchase and warrants. Diluted net loss per share includes the impact of potentially dilutive securities. During the three and nine months ended September 30, 2014 and 2013, we had securities outstanding which could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive. | |||
Reclassifications | ' | ||
Certain amounts from prior periods have been reclassified to conform to the current period presentation. | |||
Recent Accounting Pronouncements | ' | ||
Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following are a summary of recent accounting developments. | |||
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations. | |||
In July 2013, the FASB issued ASU No. 2013-11: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The new guidance requires that unrecognized tax benefits be presented on a net basis with the deferred tax assets for such carryforwards. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations. | |||
In February 2013, FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to: | |||
- | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and | ||
- | Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. | ||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). | |||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 did not have a material impact on our financial position or results of operations. | |||
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 did not have a material impact on our financial position or results of operations. |
Acquisitions_Tables
Acquisitions (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Smart Receipt [Member] | ' | ' | ||||||||||||||||||||||||||||||||
Purchase price allocations | ' | ' | ||||||||||||||||||||||||||||||||
The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows: | ||||||||||||||||||||||||||||||||||
Accounts receivable, net | $ | 161,664 | ||||||||||||||||||||||||||||||||
Other assets | 6,620 | |||||||||||||||||||||||||||||||||
Customer relationships | 2,010,000 | |||||||||||||||||||||||||||||||||
Developed technology | 260,000 | |||||||||||||||||||||||||||||||||
Trade name | 176,000 | |||||||||||||||||||||||||||||||||
Goodwill | 2,890,801 | |||||||||||||||||||||||||||||||||
Total assets acquired | 5,505,085 | |||||||||||||||||||||||||||||||||
Liabilities assumed | (191,561 | ) | ||||||||||||||||||||||||||||||||
Net assets acquired | $ | 5,313,524 | ||||||||||||||||||||||||||||||||
The purchase price consists of the following: | ||||||||||||||||||||||||||||||||||
Cash | $ | 2,368,019 | ||||||||||||||||||||||||||||||||
Earn Out | 2,273,000 | |||||||||||||||||||||||||||||||||
Common stock | 672,505 | |||||||||||||||||||||||||||||||||
Total purchase price | $ | 5,313,524 | ||||||||||||||||||||||||||||||||
Pro Form information | ' | ' | ||||||||||||||||||||||||||||||||
Mobivity Holdings Corp. | Mobivity Holdings Corp. | |||||||||||||||||||||||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Operations | Unaudited Pro Forma Condensed Consolidated Statement of Operations | |||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2014 | For the year ended December 31, 2013 | |||||||||||||||||||||||||||||||||
Mobivity | SR | Pro forma adjustments | Pro forma combined | Mobivity | SR | Pro forma adjustments | Pro forma combined | |||||||||||||||||||||||||||
Revenues | Revenues | |||||||||||||||||||||||||||||||||
Revenues | $ | 3,057,360 | $ | 214,139 | $ | - | $ | 3,271,499 | Revenues | $ | 4,093,667 | $ | 834,250 | $ | - | $ | 4,927,917 | |||||||||||||||||
Cost of revenues | 791,486 | 54,410 | - | 845,896 | Cost of revenues | 1,122,037 | 243,209 | - | 1,365,246 | |||||||||||||||||||||||||
Gross margin | 2,265,874 | 159,729 | - | 2,425,603 | Gross margin | 2,971,630 | 591,041 | - | 3,562,671 | |||||||||||||||||||||||||
Operating expenses | Operating expenses | |||||||||||||||||||||||||||||||||
General and administrative | 2,900,711 | 231,084 | 4,230 | (a) | 3,136,025 | General and administrative | 3,416,850 | 211,271 | 446,094 | (a) | 4,074,215 | |||||||||||||||||||||||
Sales and marketing | 2,723,979 | 60,077 | - | 2,784,056 | Sales and marketing | 3,469,383 | 339,615 | - | 3,808,998 | |||||||||||||||||||||||||
Engineering, research, and development | 1,026,120 | 139,649 | - | 1,165,769 | Engineering, research, and development | 824,653 | 644,330 | - | 1,468,983 | |||||||||||||||||||||||||
Depreciation and amortization | 300,273 | 403 | - | 300,676 | Depreciation and amortization | 270,579 | 3,970 | - | 274,549 | |||||||||||||||||||||||||
Total operating expenses | 6,951,083 | 431,213 | 4,230 | 7,386,526 | Goodwill impairment | 1,066,068 | - | - | 1,066,068 | |||||||||||||||||||||||||
Intangible asset impairment | 644,170 | - | - | 644,170 | ||||||||||||||||||||||||||||||
Loss from operations | (4,685,209 | ) | (271,484 | ) | (4,230 | ) | (4,960,923 | ) | Total operating expenses | 9,691,703 | 1,199,186 | 446,094 | 11,336,983 | |||||||||||||||||||||
Loss from operations | (6,720,073 | ) | (608,145 | ) | (446,094 | ) | (7,774,312 | ) | ||||||||||||||||||||||||||
Other income/(expense) | ||||||||||||||||||||||||||||||||||
Interest income | 2,034 | - | - | 2,034 | Other income/(expense) | |||||||||||||||||||||||||||||
Interest expense | (2,563 | ) | - | - | (2,563 | ) | Interest income | 747 | - | - | 747 | |||||||||||||||||||||||
Change in fair value of derivative liabilities | 55,438 | - | - | 55,438 | Interest expense | (6,348,186 | ) | (117,944 | ) | - | (6,466,130 | ) | ||||||||||||||||||||||
Total other income/(expense) | 54,909 | - | - | 54,909 | Change in fair value of derivative liabilities | (3,766,231 | ) | - | - | (3,766,231 | ) | |||||||||||||||||||||||
Gain on Debt Extinguishment | 103,177 | - | - | 103,177 | ||||||||||||||||||||||||||||||
Loss before income taxes | (4,630,300 | ) | (271,484 | ) | (4,230 | ) | (4,906,014 | ) | Gain on adjustment in contingent consideration | (28,465 | ) | - | - | (28,465 | ) | |||||||||||||||||||
Total other income/(expense) | (10,038,958 | ) | (117,944 | ) | - | (10,156,902 | ) | |||||||||||||||||||||||||||
Income tax expense | (1,678 | ) | - | - | (1,678 | ) | ||||||||||||||||||||||||||||
Loss before income taxes | (16,759,031 | ) | (726,089 | ) | (446,094 | ) | (17,931,214 | ) | ||||||||||||||||||||||||||
Net loss | $ | (4,631,978 | ) | $ | (271,484 | ) | $ | (4,230 | ) | $ | (4,907,692 | ) | ||||||||||||||||||||||
Income tax expense | - | - | - | - | ||||||||||||||||||||||||||||||
Net loss per share - basic and diluted | $ | (0.22 | ) | $ | (0.24 | ) | ||||||||||||||||||||||||||||
Net loss | $ | (16,759,031 | ) | $ | (726,089 | ) | $ | (446,094 | ) | $ | (17,931,214 | ) | ||||||||||||||||||||||
Weighted average number of shares during the period - basic and diluted | 20,672,880 | 20,299,303 | ||||||||||||||||||||||||||||||||
Net loss per share - basic and diluted | $ | (1.58 | ) | $ | (1.61 | ) | ||||||||||||||||||||||||||||
Weighted average number of shares during the period - basic and diluted | 10,612,007 | 11,116,891 | ||||||||||||||||||||||||||||||||
Sequence [Member] | ' | ' | ||||||||||||||||||||||||||||||||
Purchase price allocations | ' | ' | ||||||||||||||||||||||||||||||||
The allocation of the purchase price to the assets acquired based upon fair value determinations was as follows: | ||||||||||||||||||||||||||||||||||
Merchant relationships | $ | 181,000 | ||||||||||||||||||||||||||||||||
Trade name | 76,000 | |||||||||||||||||||||||||||||||||
Developed technology | 71,000 | |||||||||||||||||||||||||||||||||
Goodwill | 379,750 | |||||||||||||||||||||||||||||||||
Total assets acquired | $ | 707,750 | ||||||||||||||||||||||||||||||||
The purchase price consisted of the following: | ||||||||||||||||||||||||||||||||||
Cash | $ | 300,000 | ||||||||||||||||||||||||||||||||
Common stock | 183,750 | |||||||||||||||||||||||||||||||||
Earn-out payable | 224,000 | |||||||||||||||||||||||||||||||||
Total purchase price | $ | 707,750 | ||||||||||||||||||||||||||||||||
Front Door [Member] | ' | ' | ||||||||||||||||||||||||||||||||
Purchase price allocations | ' | ' | ||||||||||||||||||||||||||||||||
The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows: | ||||||||||||||||||||||||||||||||||
Cash | $ | 5,500 | ||||||||||||||||||||||||||||||||
Accounts receivable | 27,467 | |||||||||||||||||||||||||||||||||
Contracts | 813,000 | |||||||||||||||||||||||||||||||||
Customer relationships | 22,000 | |||||||||||||||||||||||||||||||||
Developed technology | 96,000 | |||||||||||||||||||||||||||||||||
Non-compete agreement | 124,000 | |||||||||||||||||||||||||||||||||
Goodwill | 1,535,658 | |||||||||||||||||||||||||||||||||
Total assets acquired | 2,623,625 | |||||||||||||||||||||||||||||||||
Liabilities assumed | (46,219 | ) | ||||||||||||||||||||||||||||||||
Net assets acquired | $ | 2,577,406 | ||||||||||||||||||||||||||||||||
The purchase price consists of the following: | ||||||||||||||||||||||||||||||||||
Cash | $ | 100,000 | ||||||||||||||||||||||||||||||||
Promissory note, net | 1,365,096 | |||||||||||||||||||||||||||||||||
Common stock | 1,112,310 | |||||||||||||||||||||||||||||||||
Total purchase price | $ | 2,577,406 | ||||||||||||||||||||||||||||||||
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Goodwill And Intangible Assets Tables | ' | ||||||||||||||||
Intangible assets | ' | ||||||||||||||||
Balance at | Balance at | ||||||||||||||||
31-Dec-13 | Additions | Amortization | 30-Sep-14 | ||||||||||||||
Patents and trademarks | $ | 118,098 | $ | - | $ | (6,859 | ) | $ | 111,239 | ||||||||
Customer contracts | 541,528 | - | (75,097 | ) | 466,431 | ||||||||||||
Customer and merchant relationships | - | 2,010,000 | (111,306 | ) | 1,898,694 | ||||||||||||
Trade name | 22,391 | 176,000 | (17,012 | ) | 181,379 | ||||||||||||
Acquired technology | 182,298 | 260,000 | (62,386 | ) | 379,912 | ||||||||||||
Non-compete agreement | 71,001 | - | (22,036 | ) | 48,965 | ||||||||||||
$ | 935,316 | $ | 2,446,000 | $ | (294,696 | ) | $ | 3,086,620 | |||||||||
During the nine months ended September 30, 2014, the following intangible assets were purchased with the following useful lives: | |||||||||||||||||
SmartReceipt, Inc.: | |||||||||||||||||
Fair value | Useful Life | ||||||||||||||||
Merchant relationships | $ | 2,010,000 | 10 years | ||||||||||||||
Trade name | $ | 176,000 | 10 years | ||||||||||||||
Developed technology | $ | 260,000 | 10 years | ||||||||||||||
Future amortization intangible assets | ' | ||||||||||||||||
Year ending December 31, | Amount | ||||||||||||||||
2014 | $ | 114,232 | |||||||||||||||
2015 | 462,987 | ||||||||||||||||
2016 | 385,026 | ||||||||||||||||
2017 | 339,669 | ||||||||||||||||
2018 | 333,820 | ||||||||||||||||
Thereafter | 1,450,886 | ||||||||||||||||
Total | $ | 3,086,620 |
Derivative_Liabilities_Tables
Derivative Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Derivative Liabilities Tables | ' | ||||||||
Derivative liabilities by instrument type | ' | ||||||||
Derivative Value by Instrument Type | 30-Sep-14 | 31-Dec-13 | |||||||
Common Stock and Warrants | $ | 50,738 | $ | 106,176 | |||||
$ | 50,738 | $ | 106,176 | ||||||
Derivative Liabilities | ' | ||||||||
Balance December 31, 2013 | $ | 106,176 | |||||||
Change in fair value of derivative liabilities | (55,438 | ) | |||||||
Balance September 30, 2014 | $ | 50,738 |
Bridge_Financing_Notes_Payable1
Bridge Financing, Notes Payable, and Accrued Interest (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Bridge Financing Notes Payable And Accrued Interest Tables | ' | ||||||||||||||||
Company's discounts to its Bridge Notes | ' | ||||||||||||||||
VMCO | ASID | Total | |||||||||||||||
31-Dec-12 | $ | (481,390 | ) | $ | (1,003,359 | ) | $ | (1,484,749 | ) | ||||||||
Additions | (1,936,191 | ) | (2,678,523 | ) | (4,614,714 | ) | |||||||||||
Amortization | 2,417,581 | 3,681,882 | 6,099,463 | ||||||||||||||
31-Dec-13 | $ | - | $ | - | $ | - | |||||||||||
Additions | - | - | - | ||||||||||||||
Amortization | - | - | - | ||||||||||||||
30-Sep-14 | $ | - | $ | - | $ | - | |||||||||||
Summary of Notes Payable and Accrued Interest | ' | ||||||||||||||||
Notes Payable | Accrued Interest | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | 30-Sep-14 | 31-Dec-13 | ||||||||||||||
Unsecured (as amended) note payable due to our Company’s former Chief Executive Officer, interest accrues at the rate of 9% compounded annually, all amounts due and payable December 31, 2008. Currently past due. | 20,000 | 20,000 | 19,505 | 16,943 | |||||||||||||
Notes payable | 20,000 | 20,000 | 19,505 | 16,943 | |||||||||||||
Totals | $ | 20,000 | $ | 20,000 | $ | 19,505 | $ | 16,943 | |||||||||
Interest Expense | ' | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Amortization of note discounts | $ | - | $ | - | $ | - | $ | 6,134,367 | |||||||||
Amortization of deferred financing costs | - | - | - | - | |||||||||||||
Other interest expense | 883 | 807 | 2,563 | 212,993 | |||||||||||||
$ | 883 | $ | 807 | $ | 2,563 | $ | 6,347,360 |
Stockholders_Equity_Deficit_Ta
Stockholdersb Equity (Deficit) (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Stockholders Equity Deficit Tables | ' | ||||||||||||||||
Stock Option Activity | ' | ||||||||||||||||
Options | |||||||||||||||||
Outstanding at December 31, 2013 | 5,672,464 | ||||||||||||||||
Granted | 898,500 | ||||||||||||||||
Exercised | - | ||||||||||||||||
Canceled/forfeited/expired | (905,933 | ) | |||||||||||||||
Outstanding at September 30, 2014 | 5,665,031 | ||||||||||||||||
Stock-Based Compensation Expense | ' | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
General and administrative | $ | 311,047 | $ | 386,347 | $ | 925,383 | $ | 662,509 | |||||||||
Sales and marketing | 29,258 | 656,396 | 116,733 | 1,656,052 | |||||||||||||
Engineering, research, and development | 16,588 | 3,081 | 26,852 | 5,056 | |||||||||||||
$ | 356,892 | $ | 1,045,824 | $ | 1,068,968 | $ | 2,323,618 | ||||||||||
Valuation Assumptions | ' | ||||||||||||||||
Nine months ended | |||||||||||||||||
September 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Risk-free interest rate | 1.97 | % | 1.27 | % | |||||||||||||
Expected life (years) | 6.08 | 5.57 | |||||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Expected volatility | 132 | % | 131.89 | % | |||||||||||||
Summary of non-employee warrant activity | ' | ||||||||||||||||
Number | |||||||||||||||||
Outstanding | |||||||||||||||||
Outstanding at December 31, 2013 | 150,556 | ||||||||||||||||
Granted | - | ||||||||||||||||
Exercised | - | ||||||||||||||||
Canceled/forfeited/expired | (555 | ) | |||||||||||||||
Outstanding at September 30, 2014 | 150,001 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Fair Value Measurements Tables | ' | ' | ||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on recurring and non-recurring bases | ' | ' | ||||||||||||||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | Description | Level 1 | Level 2 | Level 3 | Gains (Losses) | |||||||||||||||||||||||||
Goodwill (non-recurring) | $ | - | $ | - | $ | 5,999,765 | $ | - | Goodwill (non-recurring) | $ | - | $ | - | $ | 3,108,964 | $ | 849,340 | |||||||||||||||||
Intangibles, net (non-recurring) | $ | - | $ | - | $ | 3,200,851 | $ | - | Intangibles, net (non-recurring) | $ | - | $ | - | $ | 935,316 | $ | 491,204 | |||||||||||||||||
Derivatives (recurring) | $ | - | $ | - | $ | 50,738 | $ | (55,438 | ) | Derivatives (recurring) | $ | - | $ | - | $ | 106,176 | $ | (3,766,231 | ) | |||||||||||||||
Earn-out payable (non-recurring) | $ | - | $ | - | $ | 2,273,000 | $ | - | Earn-out payable (non-recurring) | $ | - | $ | - | $ | 59,000 | $ | (165,000 | ) |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Summary Of Significant Accounting Policies Details Narrative | ' | ' |
Percentage of revenue for one customer | 22.00% | 32.00% |
Acquisitions_Details
Acquisitions (Details) (Smart Receipt [Member], USD $) | Sep. 30, 2014 |
Smart Receipt [Member] | ' |
Accounts receivable, net | $161,664 |
Other assets | 6,620 |
Customer relationships | 2,010,000 |
Developed technology | 260,000 |
Trade name | 176,000 |
Goodwill | 2,890,801 |
Total assets acquired | 5,505,085 |
Liabilities assumed | -191,561 |
Net assets acquired | 5,313,524 |
Cash | 2,368,019 |
Earn Out | 2,273,000 |
Common stock | 672,505 |
Total purchase price | $5,313,524 |
Acquisitions_Details_1
Acquisitions (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Mobivity [Member] | Mobivity [Member] | Smart Receipt [Member] | Smart Receipt [Member] | Pro forma adjustments [Member] | Pro forma adjustments [Member] | Pro forma combined [Member] | Pro forma combined [Member] | |||||
Revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues | $1,044,254 | $1,035,952 | $3,057,360 | $3,149,555 | $3,057,360 | $4,093,667 | $214,139 | $834,250 | ' | ' | $3,271,499 | $4,927,917 |
Cost of revenues | 272,252 | 268,507 | 791,486 | 864,519 | 791,486 | 1,122,037 | 54,410 | 243,209 | ' | ' | 845,896 | 1,365,246 |
Gross margin | 772,002 | 767,445 | 2,265,874 | 2,285,036 | 2,265,874 | 2,971,630 | 159,729 | 591,041 | ' | ' | 2,425,603 | 3,562,671 |
Operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
General & administrative | 916,322 | 1,324,354 | 2,900,711 | 2,644,678 | 2,900,711 | 3,416,850 | 231,084 | 211,271 | 4,230 | 446,094 | 3,136,025 | 4,074,215 |
Sales & marketing | 828,333 | 1,491,563 | 2,723,979 | 3,289,904 | 2,723,979 | 3,469,383 | 60,077 | 339,615 | ' | ' | 2,785,056 | 3,808,998 |
Engineering, research, & development | 344,322 | 214,374 | 1,026,120 | 465,614 | 1,026,120 | 824,653 | 139,649 | 644,330 | ' | ' | 1,165,769 | 1,468,983 |
Depreciation & amortization | 116,309 | 89,133 | 300,273 | 181,262 | 300,273 | 270,579 | 403 | 3,970 | ' | ' | 300,676 | 274,549 |
Goodwill impairment | ' | ' | ' | ' | ' | 1,066,068 | ' | ' | ' | ' | 7,386,526 | 1,066,068 |
Intangible asset impairment | ' | ' | ' | ' | ' | 644,170 | ' | ' | ' | ' | ' | 644,170 |
Total operating expenses | 2,205,286 | 3,119,424 | 6,951,083 | 6,581,458 | 6,951,083 | 9,691,703 | 431,213 | 1,199,186 | 4,230 | 446,094 | 7,386,526 | 11,336,983 |
Loss from operations | -1,433,284 | -2,351,979 | -4,685,209 | -4,296,422 | -4,685,209 | -6,720,073 | -271,484 | -608,145 | -4,230 | -446,094 | -4,960,823 | -7,774,312 |
Other income/(expense) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest income | 132 | 385 | 2,034 | 406 | 2,034 | 747 | ' | ' | ' | ' | 2,034 | 747 |
Interest expense | -883 | -807 | -2,563 | -6,347,360 | -2,563 | -6,348,186 | ' | -117,944 | ' | ' | -2,563 | -6,466,130 |
Change in fair value of derivative liabilities | -2,354 | -51,913 | 55,438 | -3,865,511 | 55,438 | -3,766,231 | ' | ' | ' | ' | 55,438 | -3,766,231 |
Gain on Debt Extinguishment | ' | ' | ' | ' | ' | 103,177 | ' | ' | ' | ' | ' | 103,177 |
Gain (loss) on adjustment in contingent consideration | ' | ' | ' | -193,464 | ' | -28,465 | ' | ' | ' | ' | ' | -28,465 |
Total other income/(expense) | -3,105 | -52,335 | 54,909 | -10,405,929 | 54,909 | -10,038,958 | ' | -117,944 | ' | ' | 54,909 | -10,156,902 |
Loss before income taxes | -1,436,389 | -2,404,314 | -4,630,300 | -14,702,351 | -4,630,300 | -16,759,031 | -271,484 | -726,089 | -4,230 | -446,094 | -4,906,014 | -17,931,214 |
Income tax expense | -1,678 | ' | -1,678 | ' | -1,678 | ' | ' | ' | ' | ' | -1,678 | ' |
Net loss | ($1,438,067) | ($2,404,314) | ($4,631,978) | ($14,702,351) | ($4,631,978) | ($16,759,031) | ($271,484) | ($726,089) | ($4,230) | ($446,094) | ($4,907,692) | ($17,931,214) |
Net loss per share - basic and diluted | ($0.06) | ($0.15) | ($0.22) | ($1.69) | ($0.22) | ($1.58) | ' | ' | ' | ' | ($0.24) | ($1.61) |
Weighted average number of shares during the period - basic and diluted | 22,237,762 | 16,215,030 | 20,672,880 | 8,707,839 | 20,672,880 | 10,612,007 | ' | ' | ' | ' | 20,299,303 | 11,116,891 |
Acquisitions_Details_2
Acquisitions (Details 2) (Sequence [Member], USD $) | Sep. 30, 2014 |
Sequence [Member] | ' |
Merchant relationships | $181,000 |
Developed technology | 76,000 |
Trade name | 71,000 |
Goodwill | 379,750 |
Total assets acquired | 707,750 |
Cash | 300,000 |
Common stock | 183,750 |
Earn Out | 224,000 |
Total purchase price | $707,750 |
Acquisitions_Details_3
Acquisitions (Details 3) (Front Door [Member], USD $) | Sep. 30, 2014 |
Front Door [Member] | ' |
Cash | $5,500 |
Accounts receivable, net | 27,467 |
Contracts | 813,000 |
Customer relationships | 22,000 |
Merchant relationships | 96,000 |
Non-compete agreement | 124,000 |
Goodwill | 1,535,658 |
Total assets acquired | 2,623,625 |
Liabilities assumed | -46,219 |
Net assets acquired | 2,577,406 |
Cash | 100,000 |
Promissory note, net | 1,365,096 |
Common stock | 1,112,310 |
Total purchase price | $2,577,406 |
Acquisitions_Details_Narrative
Acquisitions (Details Narrative) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 |
Smart Receipt [Member] | Smart Receipt [Member] | Smart Receipt [Member] | Smart Receipt [Member] | Sequence [Member] | Front Door [Member] | Front Door [Member] | Front Door [Member] | |||
Designated Clients [Member] | Nondesignated Clients [Member] | Prior to Adjustment [Member] | Following Adjustment [Member] | |||||||
Date of transaction | ' | ' | 12-Mar-14 | ' | ' | ' | 1-May-13 | 1-May-13 | ' | ' |
Cash payment for acquisition of business, net of loan | ' | ' | $2,212,000 | ' | ' | ' | $300,000 | $100,000 | ' | ' |
Debt issued for acquisition of business | ' | ' | 150,000 | ' | ' | ' | ' | 1,400,000 | ' | ' |
Debt discount | ' | ' | ' | ' | ' | ' | ' | 34,904 | ' | ' |
Issuance of shares of common stock for acquisition | ' | ' | ' | ' | ' | ' | 750,000 | 7,000,000 | ' | ' |
Issuance of shares of common stock for acquisition, value | ' | ' | ' | ' | ' | ' | 183,750 | 1,112,310 | ' | ' |
Common stock share price | $0.00 | $0.00 | ' | ' | ' | $0.00 | ' | ' | ' | ' |
Earnout rate | ' | ' | 200.00% | ' | ' | ' | ' | ' | ' | ' |
Earn out period | ' | ' | '1 year | ' | ' | ' | '2 years | ' | ' | ' |
Earnout eligible revenue rate | ' | ' | ' | 100.00% | 50.00% | ' | 10.00% | ' | ' | ' |
Earnout terms | ' | ' | 'Payable in common shares | ' | ' | ' | ' | ' | ' | ' |
Earnout common stock price | ' | ' | ' | ' | ' | $1.85 | ' | ' | ' | ' |
Percent of shares subject to cancellation | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' |
Fair value of earn out payment | ' | ' | ' | ' | ' | ' | 224,000 | ' | ' | ' |
Liabilities assumed in transaction | ' | ' | ' | ' | ' | ' | ' | ' | 162,886 | 46,219 |
Adjustment to capital | ' | ' | ' | ' | ' | ' | ' | 1,552 | ' | 78,000 |
Goodwill (reduction) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ($38,667) |
Goodwill_and_Purchased_Intangi1
Goodwill and Purchased Intangibles (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Balance at Beginning of Period | $935,316 |
Additions | 2,446,000 |
Amortization | -294,696 |
Balance at End of Period | 3,086,620 |
Patents and trademarks [Member] | ' |
Balance at Beginning of Period | 118,098 |
Additions | ' |
Amortization | -6,859 |
Balance at End of Period | 111,239 |
Customer contracts [Member] | ' |
Balance at Beginning of Period | 541,528 |
Additions | ' |
Amortization | -75,097 |
Balance at End of Period | 466,431 |
Customer and merchant relationships [Member] | ' |
Balance at Beginning of Period | ' |
Additions | 2,010,000 |
Amortization | -111,306 |
Balance at End of Period | 1,898,694 |
Trade name [Member] | ' |
Balance at Beginning of Period | 22,391 |
Additions | 176,000 |
Amortization | -17,012 |
Balance at End of Period | 181,379 |
Acquired Technology [Member] | ' |
Balance at Beginning of Period | 182,298 |
Additions | 260,000 |
Amortization | -62,386 |
Balance at End of Period | 379,912 |
Non-compete [Member] | ' |
Balance at Beginning of Period | 71,001 |
Additions | ' |
Amortization | -22,036 |
Balance at End of Period | $48,965 |
Goodwill_and_Purchased_Intangi2
Goodwill and Purchased Intangibles (Details 1) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Merchant relationships | ' |
Fair value | $2,010,000 |
Useful Life | '10 years |
Trade Name [Member] | ' |
Fair value | 176,000 |
Useful Life | '10 years |
Developed technology | ' |
Fair value | $260,000 |
Useful Life | '10 years |
Goodwill_and_Purchased_Intangi3
Goodwill and Purchased Intangibles (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Goodwill And Purchased Intangibles Details 2 | ' | ' |
2014 | $114,232 | ' |
2015 | 462,987 | ' |
2016 | 385,026 | ' |
2017 | 339,669 | ' |
2018 | 333,820 | ' |
Thereafter | 1,450,886 | ' |
Total | $3,086,620 | $935,316 |
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Goodwill And Intangible Assets Details Narrative | ' | ' | ' | ' | ' |
Goodwill | $5,999,765 | ' | $5,999,765 | ' | $3,108,964 |
Amortization expense | 114,228 | 87,081 | 294,696 | 175,420 | ' |
Intangible asset impairment expense | ' | ' | $2,890,801 | ' | ' |
Derivative_Liabilities_Details
Derivative Liabilities (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Derivative Liabilities | $50,738 | $106,176 |
Common Stock and Warrants [Member] | ' | ' |
Derivative Liabilities | $50,738 | $106,176 |
Derivative_Liabilities_Details1
Derivative Liabilities (Details 1) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Derivative Liabilities Details 1 | ' |
Beginning balance | $106,176 |
Change in fair value of derivative liabilities | -55,438 |
Ending balance | $50,738 |
Derivative_Liabilities_Details2
Derivative Liabilities (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jun. 17, 2013 | |
Derivative Liabilities Details Narrative | ' | ' | ' | ' | ' | ' |
Warrants reclassified to additional paid-in capital | ' | ' | ' | ' | ' | $7,792,657 |
Number of common shares issuable under allonges | ' | ' | ' | ' | ' | 527,679 |
Non-employee warrants reclassified to additional paid-in capital | ' | ' | ' | ' | ' | 176,555 |
Derivative Liabilities | 50,738 | ' | 50,738 | ' | 106,176 | ' |
Net change in fair value of derivative liabilities | $2,354 | $51,913 | ($55,438) | $3,865,511 | ' | ' |
Bridge_Financing_Notes_Payable2
Bridge Financing, Notes Payable, Accrued Interest and Cash Payment Obligation (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Beginning balance | ' | ($1,484,749) |
Additions | ' | -4,614,714 |
Amortization | ' | 6,099,463 |
Ending balance | ' | ' |
VMCO [Member] | ' | ' |
Beginning balance | ' | -481,390 |
Additions | ' | -1,936,191 |
Amortization | ' | 2,417,581 |
Ending balance | ' | ' |
ASID [Member] | ' | ' |
Beginning balance | ' | -1,003,359 |
Additions | ' | -2,678,523 |
Amortization | ' | 3,681,882 |
Ending balance | ' | ' |
Bridge_Financing_Notes_Payable3
Bridge Financing, Notes Payable, Accrued Interest and Cash Payment Obligation (Details 1) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Notes Payable | $20,000 | $20,000 |
Accrued Interest | 19,505 | 16,943 |
Unsecured Note Payable [Member] | ' | ' |
Notes Payable | 20,000 | 20,000 |
Accrued Interest | 19,505 | 16,943 |
Notes payable [Member] | ' | ' |
Notes Payable | 20,000 | 20,000 |
Accrued Interest | $19,505 | $16,943 |
Bridge_Financing_Notes_Payable4
Bridge Financing, Notes Payable, Accrued Interest and Cash Payment Obligation (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Bridge Financing Notes Payable Accrued Interest And Cash Payment Obligation Details 2 | ' | ' | ' | ' |
Amortization of note discounts | ' | ' | ' | $6,134,367 |
Amortization of deferred financing costs | ' | ' | ' | ' |
Other interest expense | 883 | 807 | 2,563 | 212,993 |
Total | $883 | $807 | $2,563 | $6,347,360 |
Bridge_Financing_Notes_Payable5
Bridge Financing, Notes Payable, Accrued Interest and Cash Payment Obligation (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2011 | |
Outstanding principal of bridge notes converted | ' | $4,984,720 | ' | $4,984,720 | ' | $1,062,500 |
Notes converted into shares of common stock | ' | 24,923,602 | ' | ' | ' | ' |
Value per share | ' | $0.20 | ' | $0.20 | ' | ' |
Bridge Note Issued | ' | ' | ' | 700,000 | 700,000 | ' |
Bridge note repaid | ' | ' | ' | 1,609,682 | 1,609,682 | ' |
Amortization of deferred financing costs | ' | ' | ' | ' | ' | ' |
Accrued interest | ' | ' | 19,505 | ' | 16,943 | ' |
Discount amortization to interest expense | ' | ' | ' | 6,099,463 | 6,099,463 | ' |
Bridge NoteActivity 1 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Jan-12 | ' | ' | ' |
Bridge Note Issued | ' | ' | 520,000 | ' | ' | ' |
Note due date | ' | ' | 2-Feb-12 | ' | ' | ' |
Bridge NoteActivity 2 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Mar-12 | ' | ' | ' |
Bridge note repaid | ' | ' | 65,000 | ' | ' | ' |
Bridge NoteActivity 3 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Mar-12 | ' | ' | ' |
Bridge Note Issued | ' | ' | 220,100 | ' | ' | ' |
Note due date | ' | ' | 2-May-12 | ' | ' | ' |
Bridge NoteActivity 4 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-May-12 | ' | ' | ' |
Bridge Note Issued | ' | ' | 4,347,419 | ' | ' | ' |
Bridge note repaid | ' | ' | 184,081 | ' | ' | ' |
Bridge note, new funds | ' | ' | 2,656,250 | ' | ' | ' |
Bridge note, principal amount and accrued interest | ' | ' | 1,691,169 | ' | ' | ' |
Bridge Note Activity 5 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Oct-12 | ' | ' | ' |
Bridge notes subject to amendments | ' | ' | 4,342,419 | ' | ' | ' |
Bridge note adjustment description | ' | ' | 'In consideration of the new Bridge Note holdersB agreement to extend the maturity date, the amendment provides that the holder shall have the option to convert the principal and interest under the new Bridge Note into the securities offered by us in a qualifying equity financing at the lower of (a) the same price paid for such securities by other investors investing in the financing or (b) $0.50 per share (subject to adjustment in the event of a stock split, reclassification or the like). | ' | ' | ' |
Bridge Note Activity 6 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Nov-12 | ' | ' | ' |
Bridge note repaid | ' | ' | 5,000 | ' | ' | ' |
Bridge Note Activity 7 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Jan-13 | ' | ' | ' |
Bridge note repaid | ' | ' | 21,040 | ' | ' | ' |
Bridge Note Activity 8 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Mar-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 200,000 | ' | ' | ' |
Bridge Note Activity 9 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Apr-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 75,000 | ' | ' | ' |
Bridge Note Activity 10 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Apr-13 | ' | ' | ' |
Bridge note repaid | ' | ' | 36,659 | ' | ' | ' |
Bridge Note Activity 11 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Apr-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 20,000 | ' | ' | ' |
Note due date | ' | ' | 15-Oct-13 | ' | ' | ' |
Bridge Note Activity 12 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-May-13 | ' | ' | ' |
Revaluation of derivative features | ' | ' | 4,052,148 | ' | ' | ' |
Bridge Note Activity 13 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-May-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 387,500 | ' | ' | ' |
Bridge Note Activity 14 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-May-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 17,500 | ' | ' | ' |
Bridge Note Activity 15 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Jun-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 4,984,720 | ' | ' | ' |
Shares issued in conversion of note | ' | ' | 24,923,602 | ' | ' | ' |
Bridge Note Activity 16 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Jun-13 | ' | ' | ' |
Bridge Note Issued | ' | ' | 369,786 | ' | ' | ' |
Shares issued in conversion of note | ' | ' | 1,848,930 | ' | ' | ' |
Bridge Note Activity 17 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Jul-13 | ' | ' | ' |
Shares issued for accrued interest payable | ' | ' | 95,404 | ' | ' | ' |
Bridge Note Activity 18 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Mar-07 | ' | ' | ' |
Bridge Note Issued | ' | ' | 20,000 | ' | ' | ' |
Bridge Note Activity 19 [Member] | ' | ' | ' | ' | ' | ' |
Note transaction date | ' | ' | 1-Aug-11 | ' | ' | ' |
Bridge Note Issued | ' | ' | 194,658 | ' | ' | ' |
Present value of future payments | ' | ' | $182,460 | ' | ' | ' |
Stockholders_Equity_Deficit_De
Stockholders' Equity (Deficit) (Details) (Options) | 9 Months Ended |
Sep. 30, 2014 | |
Options | ' |
Number Outstanding | ' |
Outstanding at Beginning of Period | 5,672,464 |
Granted | 898,500 |
Exercised | ' |
Canceled/forfeited/expired | -905,933 |
Outstanding at End of Period | 5,665,031 |
Stockholders_Equity_Deficit_De1
Stockholders' Equity (Deficit) (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stockholders Equity Deficit Details 1 | ' | ' | ' | ' |
General and administrative expense | $311,047 | $386,347 | $925,383 | $662,509 |
Sales and marketing | 29,258 | 656,396 | 116,733 | 1,656,052 |
Engineering, research and development | 16,588 | 3,081 | 26,852 | 5,056 |
Operating Expenses | $356,892 | $1,045,824 | $1,068,968 | $2,323,618 |
Stockholders_Equity_Deficit_De2
Stockholders' Equity (Deficit) (Details 2) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stockholders Equity Deficit Details 2 | ' | ' |
Risk-free interest rate | 1.97% | 1.27% |
Expected life (years) | '6 years 0 months 29 days | '5 years 6 months 26 days |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 132.00% | 131.89% |
Stockholders_Equity_Deficit_De3
Stockholders' Equity (Deficit) (Details 3) (Non-employee warrant activity under 2010 Plan [Member]) | 9 Months Ended |
Sep. 30, 2014 | |
Non-employee warrant activity under 2010 Plan [Member] | ' |
Number Outstanding | ' |
Outstanding at Beginning of Period | 150,556 |
Granted | ' |
Exercised | ' |
Canceled/forfeited/expired | -555 |
Outstanding at End of Period | 150,001 |
Stockholders_Equity_Deficit_De4
Stockholders' Equity (Deficit) (Details Narrative) (USD $) | 9 Months Ended | 9 Months Ended | 9 Months Ended | 24 Months Ended | 12 Months Ended | 1 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2012 | Jun. 30, 2013 | Jun. 30, 2013 | Jul. 31, 2013 | Jul. 31, 2013 | Jul. 31, 2013 | Jul. 31, 2013 | Aug. 31, 2013 | Aug. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | |
Common Stock Issuance 1 [Member] | Common Stock Issuance 2 [Member] | Common Stock Issuance 3 [Member] | EarnOutValue [Member] | Stock Option [Member] | Stock Option Issuance 1 [Member] | Stock Option Issuance 2 [Member] | Stock Option Issuance 3 [Member] | Stock Option Issuance 4 [Member] | Stock Option Issuance 5 [Member] | Stock Option Issuance 6 [Member] | Warrant [Member] | Warrant Issuance 1 [Member] | Warrant Issuance 2 [Member] | Warrant Issuance 3 [Member] | Warrant Issuance 4 [Member] | Warrant Issuance 5 [Member] | Warrant Issuance 6 [Member] | Warrant Issuance 7 [Member] | Warrant Issuance 8 [Member] | Warrant Issuance 9 [Member] | Warrant Issuance 10 [Member] | Warrant Issuance 11 [Member] | Warrant Issuance 12 [Member] | Warrant Issuance 13 [Member] | Warrant Issuance 14 [Member] | Restricted Stock [Member] | General and Administrative Expense [Member] | General and Administrative Expense [Member] | ||||
Shares outstanding | 22,237,762 | ' | 16,319,878 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,112,499 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,155 | $4,625 |
Shares issued | ' | ' | ' | 504,884 | 5,413,000 | 1,483,669 | ' | ' | 180,000 | 200,000 | 18,500 | 5,000 | 312,500 | 182,500 | ' | 150,556 | 688,699 | 153,515 | 27,249,549 | 3,602,558 | 35,000 | 152,300 | 53,069 | 32,825 | 32,900 | 9,986 | 1,353,238 | 370,686 | 1,353,238 | ' | ' | ' |
Volatility rate | ' | ' | ' | ' | ' | ' | ' | ' | 132.00% | 132.00% | 132.00% | 132.00% | 132.00% | 132.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Price per unit | ' | ' | ' | ' | $1 | ' | ' | ' | $1.26 | $1.19 | $1.30 | $1.30 | $0.94 | $1.15 | $1.20 | ' | $2 | $2 | $0.20 | $0.20 | $0.20 | $0.20 | $0.20 | ' | $0.20 | ' | $1.20 | $1 | ' | ' | ' | ' |
Call option value | ' | ' | ' | ' | ' | ' | ' | ' | $1.40 | $1.32 | $1.44 | $1.44 | $0.85 | $1.04 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated value | ' | ' | ' | 672,505 | ' | ' | ' | ' | 226,800 | 238,000 | 24,050 | 6,500 | 265,625 | 189,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 448,705 | 1,320,569 | ' | ' | ' |
Net proceeds from issuance of stock | 4,977,130 | 6,897,177 | ' | ' | 4,977,130 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross proceeds from issuance of stock | ' | ' | ' | ' | 5,413,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing costs | ' | ' | ' | ' | 435,870 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price | ' | ' | ' | ' | $1.20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.20 | ' | ' | ' | ' |
Earn out satisfied, amount | ' | ' | ' | ' | ' | 2,210,667 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Earn out value | ' | ' | ' | ' | ' | ' | 2,032,881 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity payable | 218,446 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock payable | $199,575 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Grant of stock units | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 231,931 | ' | ' |
Grant of stock units, vested | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 173,543 | ' | ' |
Weighted average exercise price | ' | ' | ' | ' | ' | ' | ' | $1.02 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average grant date fair value | ' | ' | ' | ' | ' | ' | ' | $0.92 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cashless exercise of warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 51,167 | ' | 14,076 | ' | ' | ' | ' | ' | ' |
Warrants expiring next year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 86,949 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants expiring in two years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 55,598 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants expiring in three years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,153,358 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants expiring in four years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,903,543 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Level 1 [Member] | ' | ' |
Goodwill (non-recurring) | ' | ' |
Intangibles, net (non-recurring) | ' | ' |
Derivatives (recurring) | ' | ' |
Earn-out payable (non-recurring) | ' | ' |
Level 2 [Member] | ' | ' |
Goodwill (non-recurring) | ' | ' |
Intangibles, net (non-recurring) | ' | ' |
Derivatives (recurring) | ' | ' |
Earn-out payable (non-recurring) | ' | ' |
Level 3 [Member] | ' | ' |
Goodwill (non-recurring) | 5,999,765 | 3,108,964 |
Intangibles, net (non-recurring) | 300,851 | 935,316 |
Derivatives (recurring) | 50,738 | 106,176 |
Earn-out payable (non-recurring) | 2,273,000 | 59,000 |
Gains (Losses) [Member] | ' | ' |
Goodwill (non-recurring) | ' | 849,340 |
Intangibles, net (non-recurring) | ' | 491,204 |
Derivatives (recurring) | -55,438 | -3,766,231 |
Earn-out payable (non-recurring) | ' | ($165,000) |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Commitments And Contingencies Details Narrative | ' |
Earn out payable common shares, share price | $1.85 |
Estimated value of earn-out payable | $2,273,000 |
Earn-out payable period of payment due | '1 year |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Bridge Note Issued | ' | ' | $700,000 | $700,000 |
Notes converted into shares of common stock | 24,923,602 | ' | ' | ' |
CFO [Member] | ' | ' | ' | ' |
Note transaction date | ' | ' | ' | 1-Apr-13 |
Bridge Note Issued | ' | ' | ' | 20,000 |
Notes converted into shares of common stock | ' | ' | ' | 16,918 |
Warrants issued | ' | ' | ' | 16,918 |
Warrant price | ' | ' | ' | $1.20 |
CEO [Member] | ' | ' | ' | ' |
Note transaction date | ' | ' | ' | 1-May-13 |
Bridge Note Issued | ' | ' | ' | $17,500 |
Notes converted into shares of common stock | ' | ' | ' | 1,708 |
Warrants issued | ' | ' | ' | 14,708 |
Warrant price | ' | ' | ' | $1.20 |
Becker [Member] | ' | ' | ' | ' |
Note transaction date | ' | 17-Jun-13 | ' | ' |
Option granted | ' | 1,251,979 | ' | ' |
Option price | ' | $1.80 | ' | ' |
Private placement units issued | ' | 25,000 | ' | ' |
Private placement unit price | ' | $1 | ' | ' |
Warrants issued in private placement | ' | 6,250 | ' | ' |
Warrant price | ' | $1.20 | ' | ' |
Schatz [Member] | ' | ' | ' | ' |
Note transaction date | ' | 17-Jun-13 | ' | ' |
Option granted | ' | 417,326 | ' | ' |
Option price | ' | $1.80 | ' | ' |
Warrant price | ' | $1.20 | ' | ' |
Bynum [Member] | ' | ' | ' | ' |
Private placement units issued | ' | 25,000 | ' | ' |
Private placement unit price | ' | $1 | ' | ' |
Warrants issued in private placement | ' | 6,250 | ' | ' |
Warrant price | ' | $1.20 | ' | ' |
Jaques [Member] | ' | ' | ' | ' |
Private placement units issued | ' | 25,000 | ' | ' |
Private placement unit price | ' | $1 | ' | ' |
Warrants issued in private placement | ' | 6,250 | ' | ' |
Warrant price | ' | $1.20 | ' | ' |
Harris [Member] | ' | ' | ' | ' |
Private placement units issued | ' | 25,000 | ' | ' |
Private placement unit price | ' | $1 | ' | ' |
Warrants issued in private placement | ' | 6,250 | ' | ' |
Warrant price | ' | $1.20 | ' | ' |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) | 1 Months Ended |
Nov. 14, 2014 | |
Del Mar Consulting Group [Member] | ' |
Shares issued as compensation for services | 300,000 |
Alex Partners LLC [Member] | ' |
Shares issued as compensation for services | 200,000 |
Lythan Partners [Member] | ' |
Shares issued as compensation for services | 10,431 |