Document_and_Entity_Informatio
Document and Entity Information Document (USD $) | 9 Months Ended | ||
Sep. 30, 2013 | Nov. 01, 2013 | Jun. 30, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'IZEA, INC. | ' | ' |
Entity Central Index Key | '0001495231 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Document Type | '10-Q | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'Q3 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 22,389,331 | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Public Float | ' | ' | $1,506,252 |
Consolidated_Unaudited_Balance
Consolidated Unaudited Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current: | ' | ' |
Cash and cash equivalents | $1,663,688 | $657,946 |
Accounts receivable | 1,163,664 | 426,818 |
Prepaid expenses | 127,508 | 162,565 |
Prepaid equity financing cost | 0 | 0 |
Deferred finance costs, net of accumulated amortization of $46,059 and $25,923 | 13,042 | 1,877 |
Other current assets | 23,099 | 11,627 |
Total current assets | 2,991,001 | 1,260,833 |
Property and equipment, net | 147,813 | 113,757 |
Intangible assets, net of accumulated amortization of $72,776 and $59,276 | 4,500 | 18,000 |
Software development costs | 244,878 | 0 |
Security deposits | 7,951 | 9,048 |
Total assets | 3,396,143 | 1,401,638 |
Current liabilities | ' | ' |
Accounts payable | 741,517 | 1,163,307 |
Accrued expenses | 472,025 | 187,868 |
Unearned revenue | 1,260,919 | 1,140,140 |
Compound embedded derivative | 0 | 11,817 |
Current portion of capital lease obligations | 40,126 | 17,638 |
Current portion of notes payable | 0 | 75,000 |
Total current liabilities | 2,514,587 | 2,595,770 |
Capital lease obligations, less current portion | 30,194 | 10,212 |
Notes payable, less current portion | 0 | 106,355 |
Warrant liability | 2,139,967 | 2,750 |
Total liabilities | 4,684,748 | 2,715,087 |
Stockholders’ deficit: | ' | ' |
Common stock, $.0001 par value; 100,000,000 shares authorized; 22,335,543 and 6,186,997 issued and outstanding | 2,234 | 619 |
Additional paid-in capital | 24,265,185 | 21,489,354 |
Accumulated deficit | -25,556,024 | -22,803,422 |
Total stockholders’ deficit | -1,288,605 | -1,313,449 |
Total liabilities and stockholders’ deficit | 3,396,143 | 1,401,638 |
Series A Convertible Preferred Stock [Member] | ' | ' |
Stockholders’ deficit: | ' | ' |
Series A convertible preferred stock; $.0001 par value; 240 shares authorized; 5 shares issued and outstanding | $0 | $0 |
Consolidated_Unaudited_Balance1
Consolidated Unaudited Balance Sheets Parentheticals (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accumulated amortization on deferred finance costs | $46,059 | $25,923 |
Accumulated amortization on intangible assets | $72,776 | $59,276 |
Common stock, par value (per share) | $0.00 | $0.00 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares, issued (shares) | 22,335,543 | 6,186,997 |
Common stock, shares outstanding (shares) | 22,335,543 | 6,186,997 |
Series A Preferred stock, par value (per share) | $0.00 | ' |
Series A Preferred stock, shares authorized (shares) | 10,000,000 | ' |
Series A Convertible Preferred Stock [Member] | ' | ' |
Series A Preferred stock, par value (per share) | $0.00 | $0.00 |
Series A Preferred stock, shares authorized (shares) | 240 | 240 |
Series A Preferred stock, shares issued (shares) | 5 | 5 |
Series A Preferred stock, shares outstanding (shares) | 5 | 5 |
Consolidated_Unaudited_Stateme
Consolidated Unaudited Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue | $1,565,851 | $1,058,836 | $4,666,399 | $3,876,508 |
Cost of sales | 499,127 | 434,019 | 1,846,130 | 1,593,790 |
Gross profit | 1,066,724 | 624,817 | 2,820,269 | 2,282,718 |
Operating expenses: | ' | ' | ' | ' |
General and administrative | 1,655,727 | 1,335,858 | 4,594,888 | 4,807,610 |
Sales and marketing | 63,436 | 219,584 | 272,695 | 985,466 |
Total operating expenses | 1,719,163 | 1,555,442 | 4,867,583 | 5,793,076 |
Loss from operations | -652,439 | -930,625 | -2,047,314 | -3,510,358 |
Other income (expense): | ' | ' | ' | ' |
Interest expense | -14,439 | -33,495 | -52,435 | -77,762 |
Loss on exchange of warrants and debt | -93,482 | -37,610 | -94,214 | -802,123 |
Change in fair value of derivatives and notes payable carried at fair value, net | -215,092 | 50,160 | -558,869 | 681,639 |
Other income (expense), net | 150 | 0 | 230 | 455 |
Total other income (expense) | -322,863 | -20,945 | -705,288 | -197,791 |
Net loss | ($975,302) | ($951,570) | ($2,752,602) | ($3,708,149) |
Weighted average common shares outstanding – basic and diluted (shares) | 12,996,717 | 2,265,222 | 9,034,361 | 2,266,524 |
Loss per common share – basic and diluted (per share) | ($0.08) | ($0.42) | ($0.30) | ($1.64) |
Consolidated_Unaudited_Stateme1
Consolidated Unaudited Statement of Stockholders' Deficit (USD $) | Total | Series A Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] |
Beginning balance at Dec. 31, 2012 | ($1,313,449) | $0 | $619 | $21,489,354 | ($22,803,422) |
Beginning Balance (shares) at Dec. 31, 2012 | ' | 5 | 6,186,997 | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Sale of common stock and conversion of notes payable, net of offering costs (shares) | 1,912,244 | ' | 1,424 | 1,910,820 | ' |
Sale of common stock and conversion of notes payable, net of offering costs | ' | ' | 14,236,472 | ' | ' |
Conversion of notes payable into common stock (shares) | ' | ' | 773,983 | ' | ' |
Conversion of notes payable into common stock | 124,611 | ' | 77 | 124,534 | ' |
Exchange of warrants for common stock (shares) | ' | ' | 5,001 | ' | ' |
Exchange of warrants for common stock | 732 | ' | 1 | 731 | ' |
Fair value of warrants issued | 7,209 | ' | ' | 7,209 | ' |
Stock issued for payment of services (shares) | ' | ' | 1,133,090 | ' | ' |
Stock issued for payment of services | 373,399 | ' | 113 | 373,286 | ' |
Stock-based compensation | 359,251 | ' | ' | 359,251 | ' |
Net loss | -2,752,602 | ' | ' | ' | -2,752,602 |
Ending balance at Sep. 30, 2013 | ($1,288,605) | $0 | $2,234 | $24,265,185 | ($25,556,024) |
Ending Balance (shares) at Sep. 30, 2013 | ' | 5 | 22,335,543 | ' | ' |
Consolidated_Unaudited_Stateme2
Consolidated Unaudited Statements of Cash Flows (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flow from operating activites: [Abstract] | ' | ' |
Net loss | ($2,752,602) | ($3,708,149) |
Adjustments to rconcile net loss to net cash used for operating activities: [Abstract] | ' | ' |
Depreciation and amortization | 70,013 | 87,422 |
Stock-based compensation | 359,251 | 150,878 |
Stock issued for payment of services | 384,088 | 668,415 |
Loss on exchange of warrants and debt | 94,214 | 802,123 |
Change in fair value of derivatives and notes payable carried at fair value, net | 558,869 | -681,639 |
Bad debt expense | 24,018 | 0 |
Cash provided by (used for): [Abstract] | ' | ' |
Accounts receivable, net | -760,864 | -2,119 |
Prepaid expense and other current assets | -231,982 | 109,998 |
Accounts payable | -421,790 | -28,615 |
Accrued expenses | 310,561 | 22,149 |
Unearned revenue | 120,779 | 102,607 |
Deferred rent | 0 | -8,500 |
Net cash used for operating activities | -2,245,445 | -2,485,430 |
Cash flows from investing activities: [Abstract] | ' | ' |
Purchase of equipment | -15,064 | -9,009 |
Security deposits | 1,097 | 3,650 |
Net cash used for investing activities | -13,967 | -5,359 |
Cash flows from financing activities: [Abstract] | ' | ' |
Proceeds from issuance of notes payable, net | 1,439,798 | 543,700 |
Proceeds from issuance of common stock and warrants, net | 2,032,145 | 3,045,899 |
Proceeds from exercise of stock options | 0 | 1,099 |
Payments on notes payable and capital leases | -206,789 | -21,174 |
Net cash provided financing activities | 3,265,154 | 3,569,524 |
Net increase in cash and cash equivalents | 1,005,742 | 1,078,735 |
Cash and cash equivalents, beginning of year | 657,946 | 225,277 |
Cash and cash equivalents, end of year | 1,663,688 | 1,304,012 |
Supplemental cash flow information: [Abstract] | ' | ' |
Cash paid during period for interest | 9,902 | 6,222 |
Non-cash financing and investing activities: | ' | ' |
Fair value of compound embedded derivative in promissory notes | 0 | 27,776 |
Fair value of common stock issued for future services | 0 | 64,619 |
Fair value of warrants issued | 2,352,108 | 49,170 |
Conversion of notes to common stock | 1,501,229 | 0 |
Acquisition of assets through capital lease | $55,369 | $0 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies (Notes) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Significant Accounting Policies [Text Block] | ' | ||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Unaudited Interim Financial Information | |||||||||
The accompanying consolidated balance sheet as of September 30, 2013, the consolidated statements of operations for the three and nine months ended September 30, 2013 and 2012, the consolidated statement of stockholders' deficit for the nine months ended September 30, 2013 and the consolidated statements of cash flows for the nine months ended September 30, 2013 and 2012 are unaudited but include all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position at such dates and our results of operations and cash flows for the periods then ended in conformity with U.S. generally accepted accounting principles (“US GAAP”). The consolidated balance sheet as of December 31, 2012 has been derived from the audited consolidated financial statements at that date but, in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC"), does not include all of the information and notes required by US GAAP for complete financial statements. Operating results for the nine months ended September 30, 2013 are not necessarily indicative of results that may be expected for the entire fiscal year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 included in the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2013. | |||||||||
Nature of Business and Reverse Merger and Recapitalization | |||||||||
IZEA, Inc. (the "Company"), formerly known as IZEA Holdings, Inc. and before that, Rapid Holdings, Inc., was incorporated in Nevada on March 22, 2010. On May 12, 2011, the Company completed a share exchange pursuant to which it acquired all of the capital stock of IZEA Innovations, Inc. ("IZEA"), which became its wholly owned subsidiary. IZEA was incorporated in the state of Florida in February 2006 and was later reincorporated in the state of Delaware in September 2006 and changed its name to IZEA, Inc. from PayPerPost, Inc. on November 2, 2007. In connection with the share exchange, the Company discontinued its former business and continued the social sponsorship business of IZEA as its sole line of business. The Company's headquarters are in Orlando, FL. | |||||||||
The Company is a leading company in the social sponsorship space. The Company currently operates multiple online properties including its premiere platforms, SocialSpark and SponsoredTweets, as well as its legacy platform PayPerPost. In 2012, the Company launched a new platform called Staree and a display-advertising network to use within its platforms called IZEAMedia. Social sponsorship is when a company compensates a social media publisher or influencer such as a blogger or tweeter ("creators") to share sponsored content with their social network audience. This sponsored content is shared within the body of a content stream, a practice known as “native advertising.” The Company generates its revenue primarily through the sale of sponsorship campaigns to its advertisers. The Company fulfills these campaigns through its platforms by utilizing its creators to complete sponsorship opportunities for its advertisers. The Company also generates revenue from the posting of targeted display advertising and from various service fees. | |||||||||
Reverse Stock Split | |||||||||
On July 30, 2012, the Company filed a Certificate of Change with the Secretary of State of Nevada to effect a reverse stock split of the issued and outstanding shares of its common stock at a ratio of one share for every 40 shares outstanding prior to the effective date of the reverse stock split. Additionally, the Company's total authorized shares of common stock were decreased from 500,000,000 shares to 12,500,000 shares and subsequently increased to 100,000,000 shares in February 2013. All current and historical information contained herein related to the share and per share information for the Company's common stock or stock equivalents issued on or after May 12, 2011 reflects the 1-for-40 reverse stock split of the Company's outstanding shares of common stock that became market effective on August 1, 2012. | |||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of IZEA, Inc. as of the date of the reverse merger, and its wholly owned subsidiary, IZEA Innovations, Inc. (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Going Concern and Management’s Plans | |||||||||
The opinion of the Company's independent registered public accounting firm on the audited financial statements as of and for the year ended December 31, 2012 contains an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern. | |||||||||
The Company has incurred significant losses from operations since inception and has an accumulated deficit of $25,556,024 as of September 30, 2013. Net losses for the nine months ended September 30, 2013 and for the year ended December 31, 2012 were $2,752,602 and $4,672,638, respectively. The Company's ability to continue as a going concern is dependent upon raising capital from financing transactions. The Company’s financial statements have been prepared on the basis that it is a going concern, which assumes continuity of operations and the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments that might result if the Company was forced to discontinue its operations. | |||||||||
From August 15, 2013 through September 23, 2013, the Company raised $2,182,500 in cash through the sale of 8,730,000 shares of its common stock at a price of $0.25 per share in a 2013 Private Placement (see Note 4). Additionally, as discussed in Note 2, the Company converted notes payable and accrued interest thereon totaling $1,376,618 into 5,506,472 shares of its common stock at an effective price of $0.25 per share. The Company also issued fully-exercisable, five-year warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.25 per share and fully-exercisable, five-year warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.50 per share. The net proceeds received from the 2013 Private Placement are being used for general working capital purposes. | |||||||||
On September 30, 2013, the Company entered into an agreement pursuant to which it issued 823,090 shares of restricted common stock, at an effective price of $0.35 per share, to settle a $288,081 balance owed for legal services. | |||||||||
The 2013 Private Placement and payment of services with shares of restricted stock provided us with a positive working capital balance and cash reserves for future periods. However, revenues and cash generated from our operations are not presently sufficient to sustain our operations for more than one year. | |||||||||
The Company's continued operations are dependent on its ability to provide positive cash flow from operations and its ability to raise additional capital from financing transactions. Financing transactions may include the issuance of equity or convertible debt securities, obtaining credit facilities, or other financing alternatives. The volatility and sharp decline in the trading price of the Company's common stock over the past two years could make it more difficult to obtain financing through the issuance of equity or convertible debt securities. There can be no assurance that the Company will be successful in any future financing or that it will be available on terms that are acceptable to us. | |||||||||
Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities the Company may issue in future capital transactions may be more favorable for the new investors. Newly issued securities, warrants and restricted stock awards may include preferences, superior voting rights and privileges senior to those of existing holders. Further, the Company may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal and accounting fees, printing and distribution expenses and other costs. The Company may also be required to recognize non-cash expenses in connection with certain securities it may issue, such as convertible notes and warrants, which will adversely impact our financial condition. Future financings may be impaired by such factors as the overall level of activity in the capital markets and the Company's history of losses, which could impact the availability or cost of future financings. If the amount of capital the Company is able to raise from financing activities, together with its cash from operations, is not sufficient to satisfy the Company's capital needs, the Company may have to curtail its marketing and development plans and possibly limit operations. | |||||||||
Cash and Cash Equivalents | |||||||||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. | |||||||||
Accounts Receivable and Concentration of Credit Risk | |||||||||
Accounts receivable are customer obligations due under normal trade terms. Uncollectability of accounts receivable is not significant since most customers are bound by contract and are required to fund the Company for all the costs of an “opportunity,” defined as an order created by an advertiser for a publisher to write about the advertiser’s product. If a portion of the account balance is deemed uncollectible, the Company will either write-off the amount owed or provide a reserve based on the uncollectible portion of the account. Management determines the collectability of accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. The Company does not have a reserve for doubtful accounts as of September 30, 2013 and December 31, 2012. Management believes that this estimate is reasonable, but there can be no assurance that the estimate will not change as a result of a change in economic conditions or business conditions within the industry, the individual customers or the Company. Any adjustments to this account are reflected in the consolidated statements of operations as a general and administrative expense. Bad debt expense was less than 1% of revenue for the nine months ended September 30, 2013 and 2012. | |||||||||
Concentrations of credit risk with respect to accounts receivable are typically limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals, credit limits and monitoring procedures. The Company performs credit evaluations of its customers but generally does not require collateral to support accounts receivable. At September 30, 2013, two customers accounted for 38% of total accounts receivable in the aggregate, each of which accounted for more than 10% of the Company’s accounts receivable. At December 31, 2012, the Company had two customers which accounted for 46% of total accounts receivable in the aggregate. The Company had two and one customers that accounted for 33% and 13% of its revenue during the three and nine months ended September 30, 2013, respectively. The Company had no customers that accounted for more than 10% of its revenue during the three and nine months ended September 30, 2012. | |||||||||
Property and Equipment | |||||||||
Depreciation and amortization is computed using the straight-line method and half-year convention over the estimated useful lives of the assets as follows: | |||||||||
Equipment | 3 years | ||||||||
Furniture and fixtures | 5 - 10 years | ||||||||
Software | 3 years | ||||||||
Leasehold improvements | 3 years | ||||||||
Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. When assets are retired or otherwise disposed of, related costs and accumulated depreciation and amortization are removed and any gain or loss is reported as other income or expense. | |||||||||
Software Costs | |||||||||
The Company is in the process of developing a new platform called the Native Ad Exchange (NAX). This platform will be utilized both internally and externally to facilitate native advertising campaigns on a greater scale. In accordance with ASC 350-40, Internal Use Software and ASC 985-730, Computer Software Research and Development, research phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized. The Company determined that on April 15, 2013, the project became technologically feasible and the development phase began. The Company capitalized $146,031 and $244,878 in payroll and benefit costs to software development costs in the consolidated balance sheet during the three and nine months ended September 30, 2013, respectively. The platform is expected to be fully implemented in the first quarter of 2014. | |||||||||
Revenue Recognition | |||||||||
The Company derives its revenue from three sources: revenue from an advertiser for the use of the Company's network of social media content creators to fulfill advertiser sponsor requests for a blog post, tweet, click or action ("Sponsored Revenue"), revenue from the posting of targeted display advertising ("Media Revenue") and revenue derived from various service fees charged to advertisers and creators ("Service Fee Revenue"). Sponsored revenue is recognized and considered earned after an advertiser's opportunity is posted on the Company's online platform and their request was completed and content listed, as applicable, by the Company's creators for a requisite period of time. The requisite period ranges from 3 days for an action or tweet to 30 days for a blog. Advertisers may prepay for services by placing a deposit in their account with the Company. The deposits are typically paid by the advertiser via check, wire transfer or credit card. Deposits are recorded as unearned revenue until earned as described above. Media Revenue is recognized and considered earned when the Company's creators place targeted display advertising in blogs. Service fees charged to advertisers are primarily related to inactivity fees for dormant accounts and fees for additional services outside of sponsored revenue. Service fees charged to creators include upgrade account fees for obtaining greater visibility to advertisers in advertiser searches in our platforms, early cash-out fees if a creator wishes to take proceeds earned for services from their account when the account balance is below certain minimum balance thresholds and inactivity fees for dormant accounts. Service fees are recognized immediately when the maintenance or enhancement service is performed for an advertiser or publisher. All of the Company's revenue is generated through the rendering of services and is recognized under the general guidelines of SAB Topic 13 A.1 which states that revenue will be recognized when it is realized or realizable and earned. The Company considers its revenue as generally realized or realizable and earned once (i) persuasive evidence of an arrangement exists, (ii) services have been rendered, (iii) the price to the advertiser or customer is fixed (required to be paid at a set amount that is not subject to refund or adjustment) and determinable, and (iv) collectability is reasonably assured. The Company records revenue on the gross amount earned since it generally is the primary obligor in the arrangement, establishes the pricing and determines the service specifications. | |||||||||
Advertising Costs | |||||||||
Advertising costs are charged to expense as they are incurred, including payments to contact creators to promote the Company. Advertising expense charged to operations for the three months ended September 30, 2013 and 2012 were approximately $12,000 and $60,000, respectively. Advertising expense charged to operations for the nine months ended September 30, 2013 and 2012 were approximately $56,000 and $359,000, respectively. Advertising costs are included in sales and marketing expense in the accompanying consolidated statements of operations. | |||||||||
Income Taxes | |||||||||
The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. | |||||||||
The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s tax years, subject to examination by the Internal Revenue Service, generally remain open for three years from the date of filing. | |||||||||
Convertible Preferred Stock | |||||||||
The Company accounts for its convertible preferred stock under the provisions of Accounting Standards Codification ("ASC") on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The ASC requires an issuer to classify a financial instrument that is within the scope of the ASC as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Series A Convertible Preferred Stock of the Company issued in May 2011 does not have a redemption feature. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification. | |||||||||
Derivative Financial Instruments | |||||||||
Derivative financial instruments are defined as financial instruments or other contracts that contain a notional amount and one or more underlying (e.g., interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. | |||||||||
The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt and equity instruments that have conversion features at fixed rates that are in-the-money when issued, and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion feature. The discounts recorded in connection with the BCF and warrant valuation are recognized (a) for convertible debt as interest expense over the term of the debt, using the effective interest method or (b) for preferred stock as dividends at the time the stock first becomes convertible. | |||||||||
Fair Value of Financial Instruments | |||||||||
The Company’s financial instruments are recorded at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. There are three levels of inputs that may be used to measure fair value: | |||||||||
• | Level 1 – Valuation based on quoted market prices in active markets for identical assets and liabilities. | ||||||||
• | Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets. | ||||||||
• | Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value. | ||||||||
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The Company does not have any Level 1 or 2 financial assets or liabilities. The Company’s Level 3 financial liabilities measured at fair value consisted of certain notes payable and the warrant liability as of September 30, 2013 (see Note 3). | |||||||||
Significant unobservable inputs used in the fair value measurement of the warrants include the estimated term. Significant increases (decreases) in the estimated remaining period to exercise would result in a significantly higher (lower) fair value measurement. | |||||||||
In developing our credit risk assumption, consideration was made of publicly available bond rates and US Treasury Yields. However, since the Company does not have a formal credit-standing, management estimated its standing among various reported levels and grades for use in the model. During all periods, management estimated that the Company's standing was in the speculative to high-risk grades (BB- to CCC in the Standard and Poor's Rating). A significant increase (decrease) in the risk-adjusted interest rate could result in a significantly lower (higher) fair value measurement. | |||||||||
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. Unless otherwise disclosed, the fair value of the Company’s notes payable and capital lease obligations approximate their carrying value based upon current rates available to the Company. | |||||||||
Certain convertible promissory notes are recorded at the fair value of the hybrid instrument as a whole and are recorded at their common stock equivalent value. Significant unobservable inputs used in the fair value of the hybrid instruments include the estimated number of common shares underlying the promissory notes and the fair value of the common stock to be issued upon conversion. Generally, an increase (decrease) in the estimated number of shares underlying the promissory notes or the fair value of the common stock to be issued upon conversion would result in a (higher) lower fair value measurement. | |||||||||
Stock-Based Compensation | |||||||||
Stock-based compensation cost related to stock options granted under the May 2011 Equity Incentive Plan and August 2011 B Equity Incentive Plan (together, the "2011 Equity Incentive Plans") (see Note 4) is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below. The Company estimates the fair value of its common stock using the closing stock price of its common stock as quoted in the OTCQB marketplace on the date of the agreement. Prior to April 1, 2012, due to limited trading history and volume, the Company estimated the fair value of its common stock using recent independent valuations or the value paid in equity financing transactions. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies that are publicly traded and have had a longer trading history than itself. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The Company used the following assumptions for options granted under the 2011 Equity Incentive Plans during the three and nine months ended September 30, 2013 and 2012: | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
2011 Equity Incentive Plans Assumptions | September 30, | September 30, | September 30, | September 30, | |||||
2013 | 2012 | 2013 | 2012 | ||||||
Expected term | 10 years | 5 years | 9 years | 5 years | |||||
Weighted average volatility | 51.72% | 54.46% | 52.02% | 54.90% | |||||
Weighted average risk free interest rate | 2.74% | 0.65% | 2.27% | 0.75% | |||||
Expected dividends | — | — | — | — | |||||
The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized compensation expense to be recognized in future periods. Current average expected forfeiture rates were 50.21% during the three and nine months ended September 30, 2013 and 2012. | |||||||||
Non-Employee Stock-Based Compensation | |||||||||
The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. The fair value of equity instruments issued to consultants that vest immediately is expensed when issued. The fair value of equity instruments issued to consultants that have future vesting and are subject to forfeiture if performance does not occur is recognized as expense over the vesting period. Fair values for the unvested portion of issued instruments are adjusted each reporting period. The change in fair value is recorded to additional paid-in capital. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or the fair value of the services, whichever is more readily determinable. | |||||||||
Segment Information | |||||||||
The Company does not identify separate operating segments for management reporting purposes. The results of operations are the basis on which management evaluates operations and makes business decisions. | |||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||
Recent Accounting Pronouncements | |||||||||
There are several new accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") which are not yet effective. Management does not believe any of these accounting pronouncements will have a material impact on the Company's financial position or operating results. | |||||||||
Reclassifications | |||||||||
Certain items have been reclassified in the 2012 financial statements to conform to the 2013 presentation. |
Notes_Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2013 | |
Debt Disclosure [Abstract] | ' |
Debt Disclosure [Text Block] | ' |
NOTES PAYABLE | |
Notes Payable – Related Parties | |
On February 3, 2012, the Company issued a senior secured promissory note in the principal amount of $550,000 with an original issuance discount of $50,000, plus $3,500 in lender fees to two of its existing shareholders. In connection with the note, the Company incurred expenses of $21,800 for legal and other fees. Accordingly, net cash proceeds from the note amounted to $474,700. The holders were permitted to convert the outstanding principal amount of the note at a conversion price of 90% of the closing price of the Company's common stock, subject to further adjustment in the case of stock splits, reclassifications, reorganizations, certain issuances at less than the conversion price and the like, without limitation on the number of shares that could potentially be issued. From October 2012 through December 2012, the holders of this promissory note converted $437,850 of note value into 2,069,439 shares of common stock at an average conversion rate of $.21 per share. On February 4, 2013, the Company satisfied all of its remaining obligations under this note when the noteholders converted the final balance owed of $112,150 into 773,983 shares of common stock at an average conversion rate of $.145 per share. | |
Proceeds from the note financings were allocated first to the embedded conversion option (see Note 3) that required bifurcation and recognition as a liability at fair value and then to the carrying value of the notes. The carrying value of the notes is subject to amortization, through charges to interest expense, over the term to maturity or conversion using the effective interest method. | |
On May 4, 2012, the Company issued an unsecured 30-day promissory note to two of its existing shareholders in the principal amount of $75,000, incurring $6,000 in expenses for legal fees, which resulted in net proceeds of $69,000. In June 2012, the note was extended until December 4, 2012 and the parties agreed that the noteholders could convert the note at any time on or before the maturity date into shares of common stock at a conversion price equal to the lower of (i) $5.00 per share or (ii) 90% of the then market price based on a volume weighted average price per share of the Company's common stock for the ten trading days prior to the conversion date. The note bore interest at a rate of 8% per annum. The noteholders did not elect to convert this note and the Company was not able to pay the balance owed upon its maturity on December 4, 2012. Therefore, the conversion feature expired and the note was in default bearing interest at the default rate of 18% per annum. On August 15, 2013, the noteholders converted the $75,000 in principal, plus $12,366 of accrued interest into 3.5 investment units (349,464 shares of common stock and like number of warrants) on the same terms and conditions as other investors in our 2013 Private Placement discussed in Note 4. The Company recorded a $93,482 loss on the exchange of the promissory note for shares in the Company's consolidated statements of operations during the three months ended September 30, 2013. | |
Bridge Bank Credit Agreement | |
On March 1, 2013, the Company entered into a secured credit facility agreement with Bridge Bank, N.A. of San Jose, California. Pursuant to this agreement, the Company may submit requests for funding up to 80% of its eligible accounts receivable up to a maximum total outstanding advanced amount of $1.5 million. This agreement is secured by the Company's accounts receivable and substantially all of the Company's other assets. The agreement requires the Company to pay an annual facility fee of $7,500 (0.5% of the credit facility) and an annual due diligence fee of $1,000. Interest accrues on the advances at the prime rate plus 2% per annum. The default rate of interest is prime plus 7%. If the agreement is terminated prior to March 1, 2014, then the Company will be required to pay a termination fee of $18,750 (1% of the credit limit divided by 80%). The Company incurred $31,301 in costs related to this loan acquisition. These costs have been capitalized in the Company's consolidated balance sheet as deferred finance costs and are being amortized to interest expense over one year. As of September 30, 2013, the Company had no outstanding balance under this agreement. | |
Brian Brady Promissory Notes | |
On April 11, 2013 and May 22, 2013, the Company entered into unsecured loan agreements with Brian W. Brady, a director of the Company. Pursuant to these agreements, the Company received short-term loans totaling $750,000 due on May 31, 2013. The notes bore interest at 7% per annum with a default rate of interest at 12% based on a 360-day year. On May 31, 2013, the Company signed an extension and conversion agreement that extended the due date to August 31, 2013. Additionally, the parties agreed to allow these notes and all accrued interest thereon to be converted into equity upon closing of the next private placement on the same terms and conditions that will be applicable to other investors in the private placement. In consideration for the extension and conversion agreement, the Company issued Mr. Brady a warrant to purchase 1,000,000 shares of the Company's common stock at $0.25 per share for a period of five years. The Company also agreed that upon the first closing of its next private placement it would issue Mr. Brady an additional warrant to purchase 3,187,500 shares of the Company's common stock at $0.25 per share for a period of five years and 1,687,500 restricted stock units which vest upon the earlier of two years after issuance or completion of a transaction resulting in a change of control of the Company. Upon modification of these loans on May 31, 2013, the Company elected that the notes should be recorded at fair value as discussed further in Note 3. | |
On June 7, June 14, July 25, and August 12, 2013, the Company entered into additional unsecured loan agreements with Mr. Brady. Pursuant to these agreements, the Company received short-term loans totaling $520,000 due on August 31, 2013. The notes bore interest at 7% per annum with a default rate of interest at 12% based on a 360-day year. | |
On August 15, 2013, Mr. Brady converted the $1,270,000 principal, plus $19,252 of accrued interest, into 5,157,008 shares of common stock on the same terms and conditions as were applicable to the other investors in the 2013 Private Placement discussed in Note 4. | |
The proceeds from the loans from Mr. Brady were used to pay off the outstanding balance on the Bridge Bank facility and to pay for operating expenses. The Board determined that the terms of the agreements were consistent or better than the terms of other note agreements that the Company had issued in its recent history. The note issuances and the modification were approved by the disinterested members of the Company's Board of Directors. | |
During the three months ended September 30, 2013 and 2012, interest expense on all the notes amounted to $3,998 and $24,138, respectively. During the nine months ended September 30, 2013 and 2012, interest expense on all the notes amounted to $22,397 and $52,840, respectively. Direct finance costs allocated to the embedded derivatives were expensed in full upon issuance of the notes. Direct finance costs allocated to the notes are subject to amortization, through charges to interest expense, using the effective interest method. During the three months ended September 30, 2013 and 2012, interest expense related to the amortization of finance costs amounted to $7,826 and $7,666, respectively. During the nine months ended September 30, 2013 and 2012, interest expense related to the amortization of finance costs amounted to $20,137 and $18,700, respectively. |
Derivative_Financial_Instrumen
Derivative Financial Instruments | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | ' | ||||||||
The reconciliation of our derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2013 is as follows: | |||||||||
Convertible Notes Payable, Carried at Fair Value | |||||||||
Balance, December 31, 2012 | $ | — | |||||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 820,202 | ||||||||
Total loss included in earnings | 765,907 | ||||||||
Balance upon conversion, August 15, 2013 | $ | 1,586,109 | |||||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||||||
The Company entered into financing transactions that gave rise to derivative liabilities, which are accounted for at fair value, in the Company's financial statements. Changes in the fair value of derivative financial instruments are required to be recorded in other income in the period of change, and are reflected in the Company's consolidated statements of operations as "loss on exchange of warrants and debt" or as "change in fair value of derivatives and notes payable carried at fair value." | |||||||||
Warrant Liability | |||||||||
2012 Activity: | |||||||||
The Company determined that 153,882 warrant shares issued in its May 2011 Offering, 110,000 warrant shares issued in its September 2012 public offering and 250 warrant shares issued in July 2011 for a customer list acquisition, require classification as a liability due to certain registration rights and listing requirements in the agreements. | |||||||||
In May and June 2012, pursuant to separate private transactions with nineteen warrant holders, the Company redeemed warrants to purchase an aggregate of 123,052 shares of common stock for the same number of shares without the Company receiving any further cash consideration. The redemptions were treated as an exchange wherein the fair value of the newly issued common stock was recorded and the difference between that and the carrying value of the warrants received in the exchange is recorded in the Company's consolidated statements of operations in other income under loss on exchange and change in fair value of derivatives. As a result of the exchange, the Company recognized a loss on the exchange of these warrants in the amount of $802,123 during the three and nine months ended September 30, 2012. | |||||||||
2013 Activity: | |||||||||
In February 2013, pursuant to a private transaction with a warrant holder, the Company redeemed a warrant to purchase 5,001 shares of common stock for the same number of shares without the Company receiving any further cash consideration. The redemption was treated as an exchange wherein the fair value of the newly issued common stock was recorded and the difference between that and the zero carrying value of the warrant received in the exchange. As a result, the Company recognized a loss on exchange of warrants in the amount of $732 during the three months ended March 31, 2013. | |||||||||
From August 15, 2013 through September 23, 2013, the Company issued warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.25 per share and warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.50 per share pursuant to the terms of the Securities Purchase Agreements signed in its 2013 Private Placement (Note 4). The Company determined that these warrants require classification as a liability due to certain registration rights in the agreements that require the Company to file a registration statement with the SEC for purposes of registering the resale of the shares underlying these warrants by January 23, 2014 and use its commercially reasonable efforts to have it declared effective no later than March 23, 2014. The Company determined the fair value of these warrants on their issuance date to be $2,344,899. | |||||||||
During the three months ended September 30, 2013 and 2012, the Company recorded income of $207,462 and $10,903, respectively, due to the change in the fair value of its warrant liability. During the nine months ended September 30, 2013 and 2012, the Company recorded income of $207,682 and $738,628, respectively, due to the change in the fair value of its warrant liability. | |||||||||
The following table summarizes the Company's activity and fair value calculations of its derivative warrants for the nine months ended September 30, 2013: | |||||||||
Linked Common | Warrant | ||||||||
Shares to | Liability | ||||||||
Derivative Warrants | |||||||||
Balance, December 31, 2012 | 128,350 | $ | 2,750 | ||||||
Issuance of warrants to investors in 2013 Private Placement | 14,236,472 | 2,344,899 | |||||||
Exchange of warrants for common stock | (4,546 | ) | — | ||||||
Change in fair value of derivatives | — | (207,682 | ) | ||||||
Balance, September 30, 2013 | 14,360,276 | $ | 2,139,967 | ||||||
The Company's warrants were valued on the applicable dates using a Binomial Lattice Option Valuation Technique (“Binomial”). Significant inputs into this technique as of December 31, 2012, May 31, 2013, August 15, 2013 - September 23, 2013 and September 30, 2013 are as follows: | |||||||||
Binomial Assumptions | December 31, | May 31, | August 15, 2013 - September 23, 2013 | September 30, | |||||
2012 | 2013 | 2013 | |||||||
Fair market value of asset (1) | $0.22 | $0.20 | $0.28-$0.37 | $0.33 | |||||
Exercise price | $1.25 | $0.25-$0.50 | $0.25-$0.50 | $0.25-$1.25 | |||||
Term (2) | 4.7 years | 5.0 years | 5.0 years | 3.9 years - 4.9 years | |||||
Implied expected life (3) | 4.6 years | 5.0 years | 5.0 years | 3.9 years - 4.9 years | |||||
Volatility range of inputs (4) | 45.82%--84.21% | 50.14%--83.49% | 48.46%--81.72% | 50.38%--80.40% | |||||
Equivalent volatility (3) | 60.20% | 59.15% | 56.57%--57.55% | 54.84%--56.50% | |||||
Risk-free interest rate range of inputs (5) | 0.11%--0.72% | 1.07%--1.05% | 0.04%--1.72% | 0.02%--1.39% | |||||
Equivalent risk-free interest rate (3) | 0.32% | 0.43% | 0.56%--0.69% | 0.32%--0.52% | |||||
(1) The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||||
(2) The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||||
(3) The implied expected life, and equivalent volatility and risk-free interest rate amounts are derived from the binomial. | |||||||||
(4) The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2), above. | |||||||||
(5) The risk-free rates used for inputs represent the yields on zero coupon US Government Securities with periods to maturity consistent with the intervals described in (2), above. | |||||||||
Convertible Notes-Carried At Fair Value | |||||||||
$750,000 Notes Payable: | |||||||||
On May 31, 2013, the Company signed a loan extension and conversion agreement with Brian W. Brady, a director of the Company, that extended the due date on its $750,000 notes payable to August 31, 2013 and added a conversion feature in which the notes and all accrued interest thereon will be converted into equity upon the closing of the next private placement on the same terms and conditions that will be applicable to other investors in the future financing. In consideration for the extension and conversion agreement, the Company issued Mr. Brady a warrant to purchase 1,000,000 shares of the Company's common stock at $0.25 per share for a period of five years. The Company also agreed that upon the first closing of its next private placement it would issue Mr. Brady an additional warrant to purchase 3,187,500 shares of the Company's common stock at $0.25 per share for a period of five years and 1,687,500 restricted stock units which vest upon the earlier of two years after issuance or completion of a transaction resulting in a change of control of the Company. | |||||||||
The Company concluded that since the modification resulted in the addition of a conversion feature, the notes no longer met the definition of being indexed to the Company's own stock in accordance with ASC 815, Derivatives and Hedging. Accordingly, the modification of these loans on May 31, 2013 resulted in a change that required either bifurcation of the embedded conversion feature or the Company could choose to record the entire fair value of the convertible notes at fair value. Management chose to record the promissory notes at their fair value using a common stock equivalent approach, with changes in fair value being reported as “Change in the fair value of derivatives and notes payable carried at fair value, net” in the accompanying consolidated statements of operations. | |||||||||
As discussed in Note 2, on August 15, 2013, Mr. Brady converted the $750,000 principal into shares of common stock on the same terms and conditions as were applicable to the other investors in the 2013 Private Placement. The $750,000 convertible notes payable had a fair value of $820,202 on May 31, 2013 (the modification date) and $1,586,109 on August 15, 2013 (the conversion date). This change in fair value resulted in an expense of $422,554 and $765,907 during the three and nine months ended September 30, 2013, respectively. | |||||||||
Since the Company was currently negotiating a future financing at the time of modification, management believed there was a high probability that the future financing would occur, the common stock equivalent value of the notes was based on the negotiated terms of the future financing. | |||||||||
The newly-issued warrant, indexed to 1,000,000 shares of common stock, met the conditions for equity classification and the fair value of $88,000 was recorded in the Company's consolidated balance sheet as additional paid-in capital during the three months ended June 30, 2013. The value of the additional warrant and the restricted stock units to be issued upon the occurrence of the future financing were also recorded in additional paid-in capital. The additional warrant was valued at $280,500, using a binomial lattice option valuation technique and the restricted stock units were valued at $337,500 based on the Company's current market prices. | |||||||||
The modification added a substantial conversion feature so the debt instruments were considered “substantially” different after the modification and extinguishment accounting was applicable. Since the modification triggered debt extinguishment accounting, the fair value of the additional warrant to purchase 3,187,500 shares of the Company's common stock at $0.25 per share and the additional 1,687,500 restricted stock units were considered in the determination of the amount of extinguishment loss. However, since Mr. Brady is a board member and shareholder, the transaction is considered to be with a related party and thus, the extinguishment is in essence a capital transaction. As such, the difference between the carrying amount of the original notes of $755,227 was compared to the fair value of the modified notes plus the fair value of the warrants issued on May 31, 2013, plus the warrants and restricted stock to be issued in the future, which equaled $1,526,202. The difference of $770,975 was treated as a capital transaction and is included in additional paid-in capital as of September 30, 2013. The common stock equivalent value was based on the calculated indexed shares, the fair value of the common stock on the valuation date, and the fair value of the warrants using a binomial lattice model. | |||||||||
As of the date of modification, May 31, 2013, the common stock equivalent value was estimated as follows: | |||||||||
Indexed Shares | Fair Value per Share | Estimated Fair Value | |||||||
Common stock | 3,021,000 | $ | 0.2 | 604,200 | |||||
Warrants - $0.25 exercise price | 1,510,500 | $ | 0.088 | 132,924 | |||||
Warrants - $0.50 exercise price | 1,510,500 | $ | 0.055 | 83,078 | |||||
Common stock equivalent value | 820,202 | ||||||||
On the conversion date of August 15, 2013, the common stock equivalent value was estimated as follows: | |||||||||
Indexed Shares | Fair Value per Share | Estimated Fair Value | |||||||
Common stock | 3,064,944 | $ | 0.35 | 1,072,730 | |||||
Warrants - $0.25 exercise price | 1,532,472 | $ | 0.199 | 304,962 | |||||
Warrants - $0.50 exercise price | 1,532,472 | $ | 0.136 | 208,417 | |||||
Common stock equivalent value | 1,586,109 | ||||||||
The following table summarizes the Company's activity and fair value calculations of its derivative notes payable for the nine months ended September 30, 2013: | |||||||||
Linked Common | Bifurcated Compound Embedded Derivatives | Convertible Notes Payable, Carried at Fair Value | |||||||
Shares to | |||||||||
Convertible Notes Payable | |||||||||
Balance, December 31, 2012 | 537,146 | $ | 11,817 | $ | — | ||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 6,042,000 | — | 820,202 | ||||||
Conversion of notes into common stock | (6,903,872 | ) | (12,461 | ) | (1,586,109 | ) | |||
Change in fair value of derivatives | 324,726 | 644 | 765,907 | ||||||
Balance, September 30, 2013 | — | $ | — | $ | — | ||||
The common stock was valued at the trading market price on the date of the valuation. The warrants were valued using a Binomial model using inputs as detailed above under the Binomial Assumptions table. | |||||||||
$520,000 Notes Payable: | |||||||||
On June 7, June 14, July 25, and August 12, 2013, the Company entered into additional unsecured loan agreements with Mr. Brady. Pursuant to these agreements, the Company received short-term loans totaling $520,000 due on August 31, 2013. The notes bore interest at 7% per annum with a default rate of interest at 12% based on a 360-day year. Although the notes did not contain a conversion feature, the Company permitted Mr. Brady to convert the $520,000 principal into shares of common stock on the same terms and conditions as were applicable to the other investors in the 2013 Private Placement. The difference between the carrying amount of the original notes and accrued interest of $523,016 was compared to the $1,082,642 fair value of the 2,092,064 shares of common stock and 2,092,064 warrants received on August 15, 2013 and since the transaction is considered to be with a related party, the difference of $559,626 was treated as a capital transaction and is included in additional paid-in capital as of September 30, 2013. The common stock equivalent value was based on the calculated indexed shares, the fair value of the common stock on the valuation date, and the fair value of the warrants using a binomial lattice model. | |||||||||
Fair value measurements | |||||||||
Assets and liabilities that are recorded at fair value on a recurring basis are measured in accordance with ASC 820-10-05, Fair Value Measurements. The Brian Brady Promissory Notes originally issued April 11, 2013 and May 22, 2013 and modified on May 31, 2013 to extend the term and add a conversion feature are classified within Level 3 of the fair value hierarchy as they were valued using unobservable inputs including significant assumptions of the Company and other market participants. | |||||||||
The reconciliation of our derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2013 is as follows: | |||||||||
Convertible Notes Payable, Carried at Fair Value | |||||||||
Balance, December 31, 2012 | $ | — | |||||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 820,202 | ||||||||
Total loss included in earnings | 765,907 | ||||||||
Balance upon conversion, August 15, 2013 | $ | 1,586,109 | |||||||
Compound Embedded Derivative | |||||||||
The Company concluded that the compound embedded derivative in its $550,000 senior secured promissory note issued on February 3, 2012 and its $75,000 convertible promissory note as modified on June 6, 2012 (see Note 2) required bifurcation and liability classification as derivative financial instruments because they were not considered indexed to the Company's own stock as defined in ASC 815, Derivatives and Hedging. The noteholders did not elect to convert the $75,000 convertible promissory note prior its maturity date on December 4, 2012. Therefore, the conversion feature expired and no further derivative valuation is required. On February 4, 2013, the Company satisfied all of its remaining obligations under its $550,000 senior secured promissory note when the noteholders converted the final balance owed of $112,150 into 773,983 shares of common stock at an average conversion rate of $.145 per share. The Company recorded the $12,461 value of the compound embedded derivative on the conversion date as a charge to additional paid-in capital. As of February 4, 2013, all convertible notes in which the conversion feature had been bifurcated and recorded at fair value, had been converted. The Company recorded expense resulting from the change in the fair value of the compound embedded derivatives during the nine months ended September 30, 2013 in the amount of $644. The Company recorded expense resulting from the change in the fair value of the compound embedded derivatives during the three and nine months ended September 30, 2012 in the amount of $39,257 and $56,989, respectively. | |||||||||
The Monte Carlo Simulation (“MCS”) technique was used to calculate the fair value of the compound embedded derivatives because it provides for the necessary assumptions and inputs. The MCS technique, which is an option-based model, is a generally accepted valuation technique for valuing embedded conversion features in hybrid convertible notes, because it is an open-ended valuation model that embodies all significant assumption types, and ranges of assumption inputs that the Company agrees would likely be considered in connection with the arms-length negotiation related to the transference of the instrument by market participants. In addition to the typical assumptions in a closed-end option model, such as volatility and a risk free rate, MCS incorporates assumptions for interest risk, credit risk and redemption behavior. In addition, MCS breaks down the time to expiration into potentially a large population of time intervals and steps. However, there may be other circumstances or considerations, other than those addressed herein, that relate to both internal and external factors that would be considered by market participants as it relates specifically to the Company and the subject financial instruments. The effects, if any, of these considerations cannot be reasonably measured, quantified or qualified. | |||||||||
The following table shows the summary calculations arriving at the compound embedded derivative value as of December 31, 2012 and on the final conversion date of February 4, 2013. See the assumption details for the composition of these calculations. | |||||||||
Compound Embedded Derivative | December 31, | February 4, | |||||||
2012 | 2013 | ||||||||
Notional amount | $ | 106,355 | $ | 112,150 | |||||
Conversion price | 0.198 | 0.145 | |||||||
Linked common shares (1) | 537,146 | 773,983 | |||||||
MCS value per linked common share (2) | 0.022 | 0.016 | |||||||
Total | $ | 11,817 | $ | 12,461 | |||||
(1) The Compound Embedded Derivative is linked to a variable number of common shares based upon a percentage of the Company's closing stock price as reflected in the over-the-counter market. The number of linked shares increased as the trading market price decreased and decreased as the trading market price increased. | |||||||||
(2) The Note embodied a contingent conversion feature that was predicated upon a financing transaction that was planned for a date between the issuance date and March 2, 2012. If the financing occurred, the maturity date of the Note was August 2, 2012. If the financing did not occur, the maturity date of the Note was February 2, 2013. While, in hindsight, the financing did not occur, the calculation of value must consider that on the issuance date the contingency was present and resulted in multiple scenarios of outcome as it related to the conversion feature subject to bifurcation. The mechanism for building this contingency into the MCS value was to perform two separate calculations of value and weight them on a reasonable basis. | |||||||||
The significant inputs into the Monte Carlo Simulation used to calculate the compound embedded derivative values as of December 31, 2012 and on the final conversion date of February 4, 2013 are as follows: | |||||||||
Monte Carlo Assumptions | December 31, | February 4, | |||||||
2012 | 2013 (7) | ||||||||
Fair market value of asset (1) | $0.22 | $0.16 | |||||||
Conversion price | $0.20 | $0.14 | |||||||
Term (2) | 0.09 years | n/a | |||||||
Implied expected life (3) | 0.09 years | n/a | |||||||
Volatility range of inputs (4) | 16.12%--40.17% | n/a | |||||||
Equivalent volatility (3) | 30.70% | n/a | |||||||
Risk adjusted interest rate range of inputs (5) | 10.00% | n/a | |||||||
Equivalent risk-adjusted interest rate (3) | 10.00% | n/a | |||||||
Credit risk-adjusted interest rate (6) | 15.63% | n/a | |||||||
(1) The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||||
(2) The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||||
(3) The implied expected life, and equivalent volatility and risk-free risk-adjusted interest rate amounts are derived from the MCS. | |||||||||
(4) The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2) above. | |||||||||
(5) CED's bifurcated from debt instruments are expected to contain an element of market interest risk. That is, the risk that market driven interest rates will change during the term of a fixed rate debt instrument. | |||||||||
(6) The Company utilized a yield approach in developing its credit risk assumption. The yield approach assumes that the investor's yield on the instrument embodies a risk component, generally, equal to the difference between the actual yield and the yield for a similar instrument without regard to risk. | |||||||||
(7) Monte Carlo inputs are "n/a" on expiration date of February 4, 2013 since only intrinsic value remains. There is no time value left, so the use of an option model is not necessary. |
Stockholders_Deficit
Stockholders' Deficit | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' | ||||||||
STOCKHOLDERS' DEFICIT | |||||||||
On February 6, 2013, the Company's Board of Directors and holders of a majority of the outstanding shares of common stock of the Company approved an increase in the number of authorized shares of common stock of the Company from 12,500,000 shares to 100,000,000 shares (the “Share Increase”). The Company amended its Articles of Incorporation to effect the Share Increase by filing a Certificate of Amendment with the Nevada Secretary of State on February 11, 2013. The Company has authorized 10,000,000 shares of preferred stock with a par value of $0.0001 of which 240 shares were designated as Series A Convertible Preferred Stock on May 25, 2011. | |||||||||
2013 Private Placement | |||||||||
From August 15, 2013 through September 23, 2013, the Company raised $2,182,500 in cash through the sale of 8,730,000 shares of its common stock at a price of $0.25 per share in its 2013 Private Placement. Additionally, as discussed in Note 2, the Company converted notes payable and accrued interest thereon totaling $1,376,618 into 5,506,472 shares of its common stock at an effective price of $0.25 per share. The Company also issued fully-exercisable, five-year warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.25 per share and fully-exercisable, five-year warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.50 per share. The net proceeds received from the 2013 Private Placement are being used for general working capital purposes. The Company determined that the initial fair value of these warrants on their issuance dates total $2,344,899. Total costs of the private placement were $1,646,874 which included $150,355 in cash expenses, $2,344,899 related to the investor warrants noted above, less $848,380 related to change in fair value of Brady debt and loss on exchange of other convertible notes prior to conversion. As a result of the above transactions related to the private placement, the Company reported $1,912,244 as an increase in common stock and additional paid-in capital on the statement of stockholders deficit. | |||||||||
Pursuant to the terms of the Securities Purchase Agreements issued in the 2013 Private Placement, the Company agreed to file a registration statement with the SEC for purposes of registering the resale of these shares of common stock and the shares underlying the warrants within four months after the final closing date (by January 23, 2014) and use its commercially reasonable efforts to have it declared effective no later than six months after the final closing date (by March 23, 2014). The Company filed a registration statement on Form S-1 with the SEC on October 16, 2013, as amended on Form S-1/A filed on October 31, 2013. | |||||||||
Convertible Securities | |||||||||
From October 2012 through December 2012, the holders of the Company's $550,000 senior secured promissory note converted $437,850 of note value into 2,069,439 shares of common stock at an average conversion rate of $.21 per share. The Company recorded the related $83,663 value of the compound embedded derivative on the converted portion as a charge to additional paid-in capital. On February 4, 2013, the Company satisfied all of its remaining obligations under its $550,000 senior secured promissory note when the noteholders converted the final balance owed of $112,150 into 773,983 shares of common stock at an average conversion rate of $.145 per share. The Company recorded the $12,461 value of the compound embedded derivative on the conversion date as a charge to additional paid-in capital. | |||||||||
Additional Warrant Transactions | |||||||||
During the nine months ended September 30, 2013, pursuant to private transactions with warrant holders, the Company redeemed warrants to purchase 5,001 shares of common stock for the same number of shares without the Company receiving any further cash consideration. As a result of the exchange, the Company recognized a loss on the exchange of the warrants in the amount $732 during the nine months ended September 30, 2013. | |||||||||
On March 1, 2013, the Company entered into a $1.5 million secured credit facility agreement with Bridge Bank, N.A. of San Jose, California. In connection with this agreement, the Company issued a warrant with an expiration date after 5 years to purchase up to 58,139 shares of common stock for $15,000 ($.258 per share). This warrant met the conditions for equity classification and the fair value of $7,209, as determined using a binomial lattice option valuation technique, was recorded in the Company's consolidated balance sheet as an increase in deferred finance costs and paid-in capital. | |||||||||
On May 31, 2013, the Company signed a loan extension and conversion agreement with Brian W. Brady, a director of the Company, that extended the due date on its $750,000 notes payable to August 31, 2013. In consideration for the extension and conversion agreement, the Company issued Mr. Brady a warrant to purchase 1,000,000 shares of the Company's common stock at $0.25 per share for a period of five years. The Company also agreed that upon the first closing of its next private placement, completed on August 15, 2013, it would issue Mr. Brady an additional warrant to purchase 3,187,500 shares of the Company's common stock at $0.25 per share for a period of five years and 1,687,500 restricted stock units which vest upon the earlier of two years after issuance or completion of a transaction resulting in a change of control of the Company. These warrants and restricted stock units met the conditions for equity classification and the fair value of $706,000, as determined using a binomial lattice option valuation technique, was recorded in the Company's consolidated balance sheet as an increase in additional paid-in capital. | |||||||||
Stock Options | |||||||||
On May 12, 2011, the Company adopted the 2011 Equity Incentive Plan (the “May 2011 Plan”) that authorizes, subsequent to the latest amendment on February 6, 2013, 11,613,715 shares of common stock to be granted for future stock awards to employees, directors or contractors. As of September 30, 2013, the Company had 4,728,955 shares of common stock available for future grants under the May 2011 Plan. | |||||||||
On August 22, 2011, the Company adopted the 2011 B Equity Incentive Plan (the “August 2011 Plan”) reserving for issuance an aggregate of 87,500 shares of common stock under the August 2011 Plan. As of September 30, 2013, the Company had 50,000 shares of common stock available for future grants under the August 2011 Plan. | |||||||||
Under both the May 2011 Plan and the August 2011 Plan (together, the "2011 Equity Incentive Plans"), the Board of Directors determines the exercise price to be paid for the shares, the period within which each option may be exercised, and the terms and conditions of each option. The exercise price of the incentive and non-qualified stock options may not be less than 100% of the fair market value per share of the Company’s common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share of an incentive stock option must be equal to or exceed 110% of fair market value. Unless otherwise determined by the board of directors at the time of grant, the right to purchase shares covered by any options under the 2011 Equity Incentive Plans typically vest over the requisite service period as follows: 25% of options shall vest one year from the date of grant and the remaining options shall vest monthly, in equal increments over the following three years. The term of the options is up to ten years. The Company issues new shares to the optionee for any stock awards or options exercised pursuant to its equity incentive plans. | |||||||||
A summary of option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2012 and the nine months ended September 30, 2013 is presented below: | |||||||||
Options Outstanding | Common Shares | Weighted Average | Weighted Average | ||||||
Exercise Price | Remaining Life | ||||||||
(Years) | |||||||||
Outstanding at December 31, 2011 | 114,445 | $ | 17.61 | 4.4 | |||||
Granted | 378,293 | 5.74 | |||||||
Exercised | (551 | ) | 2 | ||||||
Forfeited | (100,210 | ) | 18.81 | ||||||
Outstanding at December 31, 2012 | 391,977 | $ | 5.87 | 4.3 | |||||
Granted | 7,640,062 | 0.25 | |||||||
Exercised | — | — | |||||||
Forfeited | (1,111,013 | ) | 0.45 | ||||||
Outstanding at September 30, 2013 | 6,921,026 | $ | 0.54 | 8.8 | |||||
Exercisable at September 30, 2013 | 1,611,198 | $ | 0.89 | 8.8 | |||||
During the year ended December 31, 2012, options were exercised into 551 shares of the Company's common stock for cash proceeds of $1,099. The intrinsic value of these options was $5,769. During the three and nine months ended September 30, 2013, no options were exercised. There is no aggregate intrinsic value on the outstanding or exercisable options as of September 30, 2013 since the weighted average exercise price per share exceeded the fair value on such date. | |||||||||
A summary of the nonvested stock option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2012 and the nine months ended September 30, 2013 is presented below: | |||||||||
Nonvested Options | Common Shares | Weighted Average | Weighted Average | ||||||
Grant Date | Remaining Years | ||||||||
Fair Value | to Vest | ||||||||
Nonvested at December 31, 2011 | 57,516 | $ | 2.73 | 2.5 | |||||
Granted | 378,293 | 2.17 | |||||||
Vested | (83,429 | ) | 2.26 | ||||||
Forfeited | (43,753 | ) | 2.78 | ||||||
Nonvested at December 31, 2012 | 308,627 | $ | 2.17 | 2.9 | |||||
Granted | 7,640,062 | 0.2 | |||||||
Vested | (1,541,284 | ) | 0.37 | ||||||
Forfeited | (1,097,577 | ) | 0.21 | ||||||
Nonvested at September 30, 2013 | 5,309,828 | $ | 0.27 | 3.6 | |||||
Stock-based compensation cost related to stock options granted under the 2011 Equity Incentive Plans is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option-pricing model that uses the assumptions stated in Note 1. Total stock-based compensation expense recognized on awards outstanding during the three months ended September 30, 2013 and 2012 was $190,877 and $31,894, respectively. Total stock-based compensation expense recognized on awards outstanding during the nine months ended September 30, 2013 and 2012 was $359,251 and $150,878, respectively. Stock-based compensation expense is recorded as a general and administrative expense in the Company's consolidated statements of operations. Future compensation related to nonvested awards expected to vest of $696,167 is estimated to be recognized over the weighted-average vesting period of three years. | |||||||||
Restricted Stock Issued for Services | |||||||||
In May 2012 and July 2012, the Company entered into seven agreements for celebrity endorsements of the Company's platforms whereby the Company paid cash of $100,000 and issued a total of 135,521 shares of restricted common stock. In the majority of the agreements, the restricted stock vested 25% immediately upon the signing of the agreements and then vests 6.25% per month over the following twelve months during the term of the agreements. | |||||||||
On June 12, 2012, the Company issued 1,200 shares of restricted common stock to its investors' counsel in order to pay for legal services totaling $6,000 related to the issuance of the $75,000 convertible promissory note. | |||||||||
On July 2, 2012, the Company issued 71,221 shares of restricted common stock to its former legal counsel in order to pay for general legal services totaling $356,103. | |||||||||
In August and September 2012, the Company issued 35,000 and 69,445 respective shares of restricted common stock as a result of a stock subscription agreement with its director, Brian Brady. | |||||||||
On January 3, 2013, the Company issued 60,000 shares of restricted stock pursuant to a twelve-month compensation arrangement with Mitchel J. Laskey for his service as a director and Chairman of the Company's Board of Directors. | |||||||||
On January 3, 2013, the Company issued 20,000 shares of restricted stock valued at $4,820 in order to pay for a small asset purchase. | |||||||||
Effective January 3, 2013, the Company entered into a twelve-month agreement to pay $4,000 per month beginning January 2013 to a firm who would provide investor relations services. In accordance with the agreement, the Company issued 100,000 shares of restricted common stock on January 15, 2013 and agreed to issue an additional 100,000 restricted shares on or before July 15, 2013. This agreement was mutually terminated on May 1, 2013 for no further cash consideration with the Company agreeing to issue the final installment of 100,000 shares of restricted common stock upon the termination of the agreement. | |||||||||
On May 16, 2013, the Company issued 30,000 shares of restricted common stock valued at $6,000 to settle an outstanding balance with a vendor. | |||||||||
On September 30, 2013, the Company entered into an agreement pursuant to which it issued 823,090 shares of restricted common stock, at an effective price of $0.35 per share, to settle a $288,081 balance owed for legal services. | |||||||||
The following tables contain summarized information about nonvested restricted stock outstanding at September 30, 2013: | |||||||||
Restricted Stock | Common Shares | ||||||||
Nonvested at December 31, 2011 | — | ||||||||
Granted | 312,387 | ||||||||
Vested | (263,805 | ) | |||||||
Forfeited | — | ||||||||
Nonvested at December 31, 2012 | 48,582 | ||||||||
Granted | 1,133,090 | ||||||||
Vested | (1,181,672 | ) | |||||||
Forfeited | — | ||||||||
Nonvested at September 30, 2013 | — | ||||||||
Total stock-based compensation expense recognized for restricted awards issued for services during the three months ended September 30, 2013 was $289,303 of which $1,222 is included in sales and marketing expense and $288,081 is included in general and administrative expense in the consolidated statements of operations. Total stock-based compensation expense recognized for restricted awards issued for services during the nine months ended September 30, 2013 was $384,088 of which $14,027 is included in sales and marketing expense and $370,061 is included in general and administrative expense in the consolidated statements of operations. The fair value of the services are based on the value of the Company's common stock over the term of service. The fair value of the restricted stock issued during the three and nine months ended September 30, 2013 was $288,081 and $366,301, respectively, and the change in the fair value of the issued but nonvested shares was $266 and $7,098, respectively. |
Loss_Per_Common_Share
Loss Per Common Share | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Earnings Per Share [Abstract] | ' | ||||||
Earnings Per Share [Text Block] | ' | ||||||
LOSS PER COMMON SHARE | |||||||
Net losses were reported during the three and nine months ended September 30, 2013 and 2012. As such, the Company excluded the following items from the computation of diluted loss per common share as their effect would be anti-dilutive: | |||||||
Three and Nine Months Ended | |||||||
September 30, | September 30, | ||||||
2013 | 2012 | ||||||
Stock options | 6,921,026 | 393,494 | |||||
Warrants | 18,605,999 | 128,434 | |||||
Restricted stock units | 1,819,400 | — | |||||
Potential conversion of Series A convertible preferred stock | 3,788 | 3,788 | |||||
Potential conversion of promissory notes payable | — | 789,142 | |||||
Total excluded shares | 27,350,213 | 1,314,858 | |||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions Disclosure [Text Block] | ' |
RELATED PARTY TRANSACTIONS | |
On December 26, 2012, Mitchel J. Laskey was elected to the Company's Board of Directors. He was then appointed as the Chairman of the Board, Chairman of the Audit Committee and as a member of the Compensation and Nominating Committees. Upon his appointment, the Board approved a twelve-month compensation arrangement whereby Mr. Laskey would receive $10,000 cash per month, 60,000 restricted stock units in January 2013, 60,000 restricted stock units in June 2013 and up to 120,000 in additional restricted stock units to be issued at the discretion of the disinterested members of the compensation committee for Mr. Laskey's service as Chairman of the Board. Mr. Laskey resigned from the Company's Board of Directors and all his related positions on April 24, 2013. Upon his resignation, he forfeited the right to receive any further cash or stock compensation. | |
As discussed in Notes 2 and 3, from April 2013 through August 2013, the Company entered into several unsecured loan agreements with Brian W. Brady, a director of the Company. Pursuant to these agreements, the Company received short-term loans totaling $1,270,000 due on August 31, 2013, as amended. The notes bore interest at 7% per annum with a default rate of interest at 12% based on a 360 day year. On August 15, 2013, Mr. Brady converted the $1,270,000 principal, plus $19,252 of accrued interest, into 5,157,008 shares of common stock on the same terms and conditions as were applicable to the other investors in the 2013 Private Placement. | |
In connection with the 2013 Private Placement, the Board awarded to Edward Murphy, our President and CEO, a bonus of $50,000 and granted him a stock option to purchase 4,398,978 shares of common stock at an exercise price of $0.25 per share, expiring ten years from the issuance date. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies Disclosure [Text Block] | ' |
COMMITMENTS & CONTINGENCIES | |
From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may harm the Company's business. | |
On October 17, 2012, Blue Calypso, Inc. filed a complaint against the Company in the U.S. District Court for the Eastern District of Texas accusing us of infringing patents related to peer-to-peer advertising between mobile communication devices seeking unspecified damages. The Company made a request that the Texas court transfer the matter to the Middle District of Florida, but no ruling has yet been made on that motion. On October 4, 2013, Blue Calypso, the Company and the other defendants submitted to the Texas court a joint claim construction and prehearing statement containing each parties’ position with regard to the meaning of the disputed claim terms of the patents. The court has also yet to rule on this matter. At this stage, the Company does not have an estimate of the likelihood or the amount of any potential exposure to it. The Company believes that there is no merit to this suit and intends to vigorously defend itself. | |
The Company is currently not aware of any other legal proceedings or claims that it believes would or could have, individually or in the aggregate, a material adverse effect on its operations or financial position. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
SUBSEQUENT EVENTS | |
No material events have occurred since September 30, 2013 that require recognition or disclosure in the financial statements. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Reverse Stock Split [Policy Text Block] | ' | ||||||||
Reverse Stock Split | |||||||||
On July 30, 2012, the Company filed a Certificate of Change with the Secretary of State of Nevada to effect a reverse stock split of the issued and outstanding shares of its common stock at a ratio of one share for every 40 shares outstanding prior to the effective date of the reverse stock split. Additionally, the Company's total authorized shares of common stock were decreased from 500,000,000 shares to 12,500,000 shares and subsequently increased to 100,000,000 shares in February 2013. | |||||||||
Consolidation, Policy [Policy Text Block] | ' | ||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of IZEA, Inc. as of the date of the reverse merger, and its wholly owned subsidiary, IZEA Innovations, Inc. (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Liquidity Disclosure [Policy Text Block] | ' | ||||||||
Going Concern and Management’s Plans | |||||||||
The opinion of the Company's independent registered public accounting firm on the audited financial statements as of and for the year ended December 31, 2012 contains an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern. | |||||||||
The Company has incurred significant losses from operations since inception and has an accumulated deficit of $25,556,024 as of September 30, 2013. Net losses for the nine months ended September 30, 2013 and for the year ended December 31, 2012 were $2,752,602 and $4,672,638, respectively. The Company's ability to continue as a going concern is dependent upon raising capital from financing transactions. The Company’s financial statements have been prepared on the basis that it is a going concern, which assumes continuity of operations and the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments that might result if the Company was forced to discontinue its operations. | |||||||||
From August 15, 2013 through September 23, 2013, the Company raised $2,182,500 in cash through the sale of 8,730,000 shares of its common stock at a price of $0.25 per share in a 2013 Private Placement (see Note 4). Additionally, as discussed in Note 2, the Company converted notes payable and accrued interest thereon totaling $1,376,618 into 5,506,472 shares of its common stock at an effective price of $0.25 per share. The Company also issued fully-exercisable, five-year warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.25 per share and fully-exercisable, five-year warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.50 per share. The net proceeds received from the 2013 Private Placement are being used for general working capital purposes. | |||||||||
On September 30, 2013, the Company entered into an agreement pursuant to which it issued 823,090 shares of restricted common stock, at an effective price of $0.35 per share, to settle a $288,081 balance owed for legal services. | |||||||||
Cash and Cash Equivalents, Policy [Policy Text Block] | ' | ||||||||
Cash and Cash Equivalents | |||||||||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. | |||||||||
Receivables, Policy [Policy Text Block] | ' | ||||||||
Accounts Receivable and Concentration of Credit Risk | |||||||||
Accounts receivable are customer obligations due under normal trade terms. Uncollectability of accounts receivable is not significant since most customers are bound by contract and are required to fund the Company for all the costs of an “opportunity,” defined as an order created by an advertiser for a publisher to write about the advertiser’s product. If a portion of the account balance is deemed uncollectible, the Company will either write-off the amount owed or provide a reserve based on the uncollectible portion of the account. Management determines the collectability of accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. The Company does not have a reserve for doubtful accounts as of September 30, 2013 and December 31, 2012. Management believes that this estimate is reasonable, but there can be no assurance that the estimate will not change as a result of a change in economic conditions or business conditions within the industry, the individual customers or the Company. Any adjustments to this account are reflected in the consolidated statements of operations as a general and administrative expense. Bad debt expense was less than 1% of revenue for the nine months ended September 30, 2013 and 2012. | |||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' | ||||||||
Concentrations of credit risk with respect to accounts receivable are typically limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals, credit limits and monitoring procedures. The Company performs credit evaluations of its customers but generally does not require collateral to support accounts receivable. At September 30, 2013, two customers accounted for 38% of total accounts receivable in the aggregate, each of which accounted for more than 10% of the Company’s accounts receivable. At December 31, 2012, the Company had two customers which accounted for 46% of total accounts receivable in the aggregate. The Company had two and one customers that accounted for 33% and 13% of its revenue during the three and nine months ended September 30, 2013, respectively. The Company had no customers that accounted for more than 10% of its revenue during the three and nine months ended September 30, 2012. | |||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | ' | ||||||||
Property and Equipment | |||||||||
Depreciation and amortization is computed using the straight-line method and half-year convention over the estimated useful lives of the assets as follows: | |||||||||
Equipment | 3 years | ||||||||
Furniture and fixtures | 5 - 10 years | ||||||||
Software | 3 years | ||||||||
Leasehold improvements | 3 years | ||||||||
Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. When assets are retired or otherwise disposed of, related costs and accumulated depreciation and amortization are removed and any gain or loss is reported as other income or expense. | |||||||||
Research, Development, and Computer Software, Policy [Policy Text Block] | ' | ||||||||
Software Costs | |||||||||
The Company is in the process of developing a new platform called the Native Ad Exchange (NAX). This platform will be utilized both internally and externally to facilitate native advertising campaigns on a greater scale. In accordance with ASC 350-40, Internal Use Software and ASC 985-730, Computer Software Research and Development, research phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized. The Company determined that on April 15, 2013, the project became technologically feasible and the development phase began. The Company capitalized $146,031 and $244,878 in payroll and benefit costs to software development costs in the consolidated balance sheet during the three and nine months ended September 30, 2013, respectively. | |||||||||
Revenue Recognition, Policy [Policy Text Block] | ' | ||||||||
Revenue Recognition | |||||||||
The Company derives its revenue from three sources: revenue from an advertiser for the use of the Company's network of social media content creators to fulfill advertiser sponsor requests for a blog post, tweet, click or action ("Sponsored Revenue"), revenue from the posting of targeted display advertising ("Media Revenue") and revenue derived from various service fees charged to advertisers and creators ("Service Fee Revenue"). Sponsored revenue is recognized and considered earned after an advertiser's opportunity is posted on the Company's online platform and their request was completed and content listed, as applicable, by the Company's creators for a requisite period of time. The requisite period ranges from 3 days for an action or tweet to 30 days for a blog. Advertisers may prepay for services by placing a deposit in their account with the Company. The deposits are typically paid by the advertiser via check, wire transfer or credit card. Deposits are recorded as unearned revenue until earned as described above. Media Revenue is recognized and considered earned when the Company's creators place targeted display advertising in blogs. Service fees charged to advertisers are primarily related to inactivity fees for dormant accounts and fees for additional services outside of sponsored revenue. Service fees charged to creators include upgrade account fees for obtaining greater visibility to advertisers in advertiser searches in our platforms, early cash-out fees if a creator wishes to take proceeds earned for services from their account when the account balance is below certain minimum balance thresholds and inactivity fees for dormant accounts. Service fees are recognized immediately when the maintenance or enhancement service is performed for an advertiser or publisher. All of the Company's revenue is generated through the rendering of services and is recognized under the general guidelines of SAB Topic 13 A.1 which states that revenue will be recognized when it is realized or realizable and earned. The Company considers its revenue as generally realized or realizable and earned once (i) persuasive evidence of an arrangement exists, (ii) services have been rendered, (iii) the price to the advertiser or customer is fixed (required to be paid at a set amount that is not subject to refund or adjustment) and determinable, and (iv) collectability is reasonably assured. The Company records revenue on the gross amount earned since it generally is the primary obligor in the arrangement, establishes the pricing and determines the service specifications. | |||||||||
Advertising Cost, Policy, Expensed Advertising Cost [Policy Text Block] | ' | ||||||||
Advertising Costs | |||||||||
Advertising costs are charged to expense as they are incurred, including payments to contact creators to promote the Company. Advertising expense charged to operations for the three months ended September 30, 2013 and 2012 were approximately $12,000 and $60,000, respectively. Advertising expense charged to operations for the nine months ended September 30, 2013 and 2012 were approximately $56,000 and $359,000, respectively. Advertising costs are included in sales and marketing expense in the accompanying consolidated statements of operations. | |||||||||
Income Tax, Policy [Policy Text Block] | ' | ||||||||
Income Taxes | |||||||||
The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. | |||||||||
The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s tax years, subject to examination by the Internal Revenue Service, generally remain open for three years from the date of filing. | |||||||||
Convertible Preferred Stock [Policy Text Block] | ' | ||||||||
Convertible Preferred Stock | |||||||||
The Company accounts for its convertible preferred stock under the provisions of Accounting Standards Codification ("ASC") on Distinguishing Liabilities from Equity, which sets forth the standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The ASC requires an issuer to classify a financial instrument that is within the scope of the ASC as a liability if such financial instrument embodies an unconditional obligation to redeem the instrument at a specified date and/or upon an event certain to occur. The Series A Convertible Preferred Stock of the Company issued in May 2011 does not have a redemption feature. Future changes in the certainty of the Company’s obligation to redeem these instruments could result in a change in classification. | |||||||||
Derivatives, Policy [Policy Text Block] | ' | ||||||||
Derivative Financial Instruments | |||||||||
Derivative financial instruments are defined as financial instruments or other contracts that contain a notional amount and one or more underlying (e.g., interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company accounts for derivative instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”), which requires additional disclosures about the Company’s objectives and strategies for using derivative instruments, how the derivative instruments and related hedged items are accounted for, and how the derivative instruments and related hedging items affect the financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability. | |||||||||
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' | ||||||||
Fair Value of Financial Instruments | |||||||||
The Company’s financial instruments are recorded at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect certain market assumptions. There are three levels of inputs that may be used to measure fair value: | |||||||||
• | Level 1 – Valuation based on quoted market prices in active markets for identical assets and liabilities. | ||||||||
• | Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets. | ||||||||
• | Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value. | ||||||||
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The Company does not have any Level 1 or 2 financial assets or liabilities. The Company’s Level 3 financial liabilities measured at fair value consisted of certain notes payable and the warrant liability as of September 30, 2013 (see Note 3). | |||||||||
Significant unobservable inputs used in the fair value measurement of the warrants include the estimated term. Significant increases (decreases) in the estimated remaining period to exercise would result in a significantly higher (lower) fair value measurement. | |||||||||
In developing our credit risk assumption, consideration was made of publicly available bond rates and US Treasury Yields. However, since the Company does not have a formal credit-standing, management estimated its standing among various reported levels and grades for use in the model. During all periods, management estimated that the Company's standing was in the speculative to high-risk grades (BB- to CCC in the Standard and Poor's Rating). A significant increase (decrease) in the risk-adjusted interest rate could result in a significantly lower (higher) fair value measurement. | |||||||||
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. Unless otherwise disclosed, the fair value of the Company’s notes payable and capital lease obligations approximate their carrying value based upon current rates available to the Company. | |||||||||
Certain convertible promissory notes are recorded at the fair value of the hybrid instrument as a whole and are recorded at their common stock equivalent value. Significant unobservable inputs used in the fair value of the hybrid instruments include the estimated number of common shares underlying the promissory notes and the fair value of the common stock to be issued upon conversion. Generally, an increase (decrease) in the estimated number of shares underlying the promissory notes or the fair value of the common stock to be issued upon conversion would result in a (higher) lower fair value measurement. | |||||||||
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' | ||||||||
Stock-Based Compensation | |||||||||
Stock-based compensation cost related to stock options granted under the May 2011 Equity Incentive Plan and August 2011 B Equity Incentive Plan (together, the "2011 Equity Incentive Plans") (see Note 4) is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below. The Company estimates the fair value of its common stock using the closing stock price of its common stock as quoted in the OTCQB marketplace on the date of the agreement. Prior to April 1, 2012, due to limited trading history and volume, the Company estimated the fair value of its common stock using recent independent valuations or the value paid in equity financing transactions. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies that are publicly traded and have had a longer trading history than itself. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The Company used the following assumptions for options granted under the 2011 Equity Incentive Plans during the three and nine months ended September 30, 2013 and 2012: | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
2011 Equity Incentive Plans Assumptions | September 30, | September 30, | September 30, | September 30, | |||||
2013 | 2012 | 2013 | 2012 | ||||||
Expected term | 10 years | 5 years | 9 years | 5 years | |||||
Weighted average volatility | 51.72% | 54.46% | 52.02% | 54.90% | |||||
Weighted average risk free interest rate | 2.74% | 0.65% | 2.27% | 0.75% | |||||
Expected dividends | — | — | — | — | |||||
The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized compensation expense to be recognized in future periods. Current average expected forfeiture rates were 50.21% during the three and nine months ended September 30, 2013 and 2012. | |||||||||
Non-Employee Stock-Based Compensation [Policy Text Block] | ' | ||||||||
Non-Employee Stock-Based Compensation | |||||||||
The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. The fair value of equity instruments issued to consultants that vest immediately is expensed when issued. The fair value of equity instruments issued to consultants that have future vesting and are subject to forfeiture if performance does not occur is recognized as expense over the vesting period. Fair values for the unvested portion of issued instruments are adjusted each reporting period. The change in fair value is recorded to additional paid-in capital. Stock-based compensation related to non-employees is accounted for based on the fair value of the related stock or the fair value of the services, whichever is more readily determinable. | |||||||||
Segment Reporting, Policy [Policy Text Block] | ' | ||||||||
Segment Information | |||||||||
The Company does not identify separate operating segments for management reporting purposes. The results of operations are the basis on which management evaluates operations and makes business decisions. | |||||||||
Use of Estimates, Policy [Policy Text Block] | ' | ||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | ||||||||
Recent Accounting Pronouncements | |||||||||
There are several new accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") which are not yet effective. Management does not believe any of these accounting pronouncements will have a material impact on the Company's financial position or operating results. | |||||||||
Reclassification, Policy [Policy Text Block] | ' | ||||||||
Reclassifications | |||||||||
Certain items have been reclassified in the 2012 financial statements to conform to the 2013 presentation. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Property, Plant and Equipment [Table Text Block] | ' | ||||||||
Depreciation and amortization is computed using the straight-line method and half-year convention over the estimated useful lives of the assets as follows: | |||||||||
Equipment | 3 years | ||||||||
Furniture and fixtures | 5 - 10 years | ||||||||
Software | 3 years | ||||||||
Leasehold improvements | 3 years | ||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | ' | ||||||||
The Company used the following assumptions for options granted under the 2011 Equity Incentive Plans during the three and nine months ended September 30, 2013 and 2012: | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
2011 Equity Incentive Plans Assumptions | September 30, | September 30, | September 30, | September 30, | |||||
2013 | 2012 | 2013 | 2012 | ||||||
Expected term | 10 years | 5 years | 9 years | 5 years | |||||
Weighted average volatility | 51.72% | 54.46% | 52.02% | 54.90% | |||||
Weighted average risk free interest rate | 2.74% | 0.65% | 2.27% | 0.75% | |||||
Expected dividends | — | — | — | — |
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Derivative [Line Items] | ' | ||||||||
Derivative Instruments and Hedging Activities Disclosure [Text Block] | ' | ||||||||
The reconciliation of our derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2013 is as follows: | |||||||||
Convertible Notes Payable, Carried at Fair Value | |||||||||
Balance, December 31, 2012 | $ | — | |||||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 820,202 | ||||||||
Total loss included in earnings | 765,907 | ||||||||
Balance upon conversion, August 15, 2013 | $ | 1,586,109 | |||||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||||||
The Company entered into financing transactions that gave rise to derivative liabilities, which are accounted for at fair value, in the Company's financial statements. Changes in the fair value of derivative financial instruments are required to be recorded in other income in the period of change, and are reflected in the Company's consolidated statements of operations as "loss on exchange of warrants and debt" or as "change in fair value of derivatives and notes payable carried at fair value." | |||||||||
Warrant Liability | |||||||||
2012 Activity: | |||||||||
The Company determined that 153,882 warrant shares issued in its May 2011 Offering, 110,000 warrant shares issued in its September 2012 public offering and 250 warrant shares issued in July 2011 for a customer list acquisition, require classification as a liability due to certain registration rights and listing requirements in the agreements. | |||||||||
In May and June 2012, pursuant to separate private transactions with nineteen warrant holders, the Company redeemed warrants to purchase an aggregate of 123,052 shares of common stock for the same number of shares without the Company receiving any further cash consideration. The redemptions were treated as an exchange wherein the fair value of the newly issued common stock was recorded and the difference between that and the carrying value of the warrants received in the exchange is recorded in the Company's consolidated statements of operations in other income under loss on exchange and change in fair value of derivatives. As a result of the exchange, the Company recognized a loss on the exchange of these warrants in the amount of $802,123 during the three and nine months ended September 30, 2012. | |||||||||
2013 Activity: | |||||||||
In February 2013, pursuant to a private transaction with a warrant holder, the Company redeemed a warrant to purchase 5,001 shares of common stock for the same number of shares without the Company receiving any further cash consideration. The redemption was treated as an exchange wherein the fair value of the newly issued common stock was recorded and the difference between that and the zero carrying value of the warrant received in the exchange. As a result, the Company recognized a loss on exchange of warrants in the amount of $732 during the three months ended March 31, 2013. | |||||||||
From August 15, 2013 through September 23, 2013, the Company issued warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.25 per share and warrants to purchase 7,118,236 shares of its common stock at an exercise price of $0.50 per share pursuant to the terms of the Securities Purchase Agreements signed in its 2013 Private Placement (Note 4). The Company determined that these warrants require classification as a liability due to certain registration rights in the agreements that require the Company to file a registration statement with the SEC for purposes of registering the resale of the shares underlying these warrants by January 23, 2014 and use its commercially reasonable efforts to have it declared effective no later than March 23, 2014. The Company determined the fair value of these warrants on their issuance date to be $2,344,899. | |||||||||
During the three months ended September 30, 2013 and 2012, the Company recorded income of $207,462 and $10,903, respectively, due to the change in the fair value of its warrant liability. During the nine months ended September 30, 2013 and 2012, the Company recorded income of $207,682 and $738,628, respectively, due to the change in the fair value of its warrant liability. | |||||||||
The following table summarizes the Company's activity and fair value calculations of its derivative warrants for the nine months ended September 30, 2013: | |||||||||
Linked Common | Warrant | ||||||||
Shares to | Liability | ||||||||
Derivative Warrants | |||||||||
Balance, December 31, 2012 | 128,350 | $ | 2,750 | ||||||
Issuance of warrants to investors in 2013 Private Placement | 14,236,472 | 2,344,899 | |||||||
Exchange of warrants for common stock | (4,546 | ) | — | ||||||
Change in fair value of derivatives | — | (207,682 | ) | ||||||
Balance, September 30, 2013 | 14,360,276 | $ | 2,139,967 | ||||||
The Company's warrants were valued on the applicable dates using a Binomial Lattice Option Valuation Technique (“Binomial”). Significant inputs into this technique as of December 31, 2012, May 31, 2013, August 15, 2013 - September 23, 2013 and September 30, 2013 are as follows: | |||||||||
Binomial Assumptions | December 31, | May 31, | August 15, 2013 - September 23, 2013 | September 30, | |||||
2012 | 2013 | 2013 | |||||||
Fair market value of asset (1) | $0.22 | $0.20 | $0.28-$0.37 | $0.33 | |||||
Exercise price | $1.25 | $0.25-$0.50 | $0.25-$0.50 | $0.25-$1.25 | |||||
Term (2) | 4.7 years | 5.0 years | 5.0 years | 3.9 years - 4.9 years | |||||
Implied expected life (3) | 4.6 years | 5.0 years | 5.0 years | 3.9 years - 4.9 years | |||||
Volatility range of inputs (4) | 45.82%--84.21% | 50.14%--83.49% | 48.46%--81.72% | 50.38%--80.40% | |||||
Equivalent volatility (3) | 60.20% | 59.15% | 56.57%--57.55% | 54.84%--56.50% | |||||
Risk-free interest rate range of inputs (5) | 0.11%--0.72% | 1.07%--1.05% | 0.04%--1.72% | 0.02%--1.39% | |||||
Equivalent risk-free interest rate (3) | 0.32% | 0.43% | 0.56%--0.69% | 0.32%--0.52% | |||||
(1) The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||||
(2) The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||||
(3) The implied expected life, and equivalent volatility and risk-free interest rate amounts are derived from the binomial. | |||||||||
(4) The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2), above. | |||||||||
(5) The risk-free rates used for inputs represent the yields on zero coupon US Government Securities with periods to maturity consistent with the intervals described in (2), above. | |||||||||
Convertible Notes-Carried At Fair Value | |||||||||
$750,000 Notes Payable: | |||||||||
On May 31, 2013, the Company signed a loan extension and conversion agreement with Brian W. Brady, a director of the Company, that extended the due date on its $750,000 notes payable to August 31, 2013 and added a conversion feature in which the notes and all accrued interest thereon will be converted into equity upon the closing of the next private placement on the same terms and conditions that will be applicable to other investors in the future financing. In consideration for the extension and conversion agreement, the Company issued Mr. Brady a warrant to purchase 1,000,000 shares of the Company's common stock at $0.25 per share for a period of five years. The Company also agreed that upon the first closing of its next private placement it would issue Mr. Brady an additional warrant to purchase 3,187,500 shares of the Company's common stock at $0.25 per share for a period of five years and 1,687,500 restricted stock units which vest upon the earlier of two years after issuance or completion of a transaction resulting in a change of control of the Company. | |||||||||
The Company concluded that since the modification resulted in the addition of a conversion feature, the notes no longer met the definition of being indexed to the Company's own stock in accordance with ASC 815, Derivatives and Hedging. Accordingly, the modification of these loans on May 31, 2013 resulted in a change that required either bifurcation of the embedded conversion feature or the Company could choose to record the entire fair value of the convertible notes at fair value. Management chose to record the promissory notes at their fair value using a common stock equivalent approach, with changes in fair value being reported as “Change in the fair value of derivatives and notes payable carried at fair value, net” in the accompanying consolidated statements of operations. | |||||||||
As discussed in Note 2, on August 15, 2013, Mr. Brady converted the $750,000 principal into shares of common stock on the same terms and conditions as were applicable to the other investors in the 2013 Private Placement. The $750,000 convertible notes payable had a fair value of $820,202 on May 31, 2013 (the modification date) and $1,586,109 on August 15, 2013 (the conversion date). This change in fair value resulted in an expense of $422,554 and $765,907 during the three and nine months ended September 30, 2013, respectively. | |||||||||
Since the Company was currently negotiating a future financing at the time of modification, management believed there was a high probability that the future financing would occur, the common stock equivalent value of the notes was based on the negotiated terms of the future financing. | |||||||||
The newly-issued warrant, indexed to 1,000,000 shares of common stock, met the conditions for equity classification and the fair value of $88,000 was recorded in the Company's consolidated balance sheet as additional paid-in capital during the three months ended June 30, 2013. The value of the additional warrant and the restricted stock units to be issued upon the occurrence of the future financing were also recorded in additional paid-in capital. The additional warrant was valued at $280,500, using a binomial lattice option valuation technique and the restricted stock units were valued at $337,500 based on the Company's current market prices. | |||||||||
The modification added a substantial conversion feature so the debt instruments were considered “substantially” different after the modification and extinguishment accounting was applicable. Since the modification triggered debt extinguishment accounting, the fair value of the additional warrant to purchase 3,187,500 shares of the Company's common stock at $0.25 per share and the additional 1,687,500 restricted stock units were considered in the determination of the amount of extinguishment loss. However, since Mr. Brady is a board member and shareholder, the transaction is considered to be with a related party and thus, the extinguishment is in essence a capital transaction. As such, the difference between the carrying amount of the original notes of $755,227 was compared to the fair value of the modified notes plus the fair value of the warrants issued on May 31, 2013, plus the warrants and restricted stock to be issued in the future, which equaled $1,526,202. The difference of $770,975 was treated as a capital transaction and is included in additional paid-in capital as of September 30, 2013. The common stock equivalent value was based on the calculated indexed shares, the fair value of the common stock on the valuation date, and the fair value of the warrants using a binomial lattice model. | |||||||||
As of the date of modification, May 31, 2013, the common stock equivalent value was estimated as follows: | |||||||||
Indexed Shares | Fair Value per Share | Estimated Fair Value | |||||||
Common stock | 3,021,000 | $ | 0.2 | 604,200 | |||||
Warrants - $0.25 exercise price | 1,510,500 | $ | 0.088 | 132,924 | |||||
Warrants - $0.50 exercise price | 1,510,500 | $ | 0.055 | 83,078 | |||||
Common stock equivalent value | 820,202 | ||||||||
On the conversion date of August 15, 2013, the common stock equivalent value was estimated as follows: | |||||||||
Indexed Shares | Fair Value per Share | Estimated Fair Value | |||||||
Common stock | 3,064,944 | $ | 0.35 | 1,072,730 | |||||
Warrants - $0.25 exercise price | 1,532,472 | $ | 0.199 | 304,962 | |||||
Warrants - $0.50 exercise price | 1,532,472 | $ | 0.136 | 208,417 | |||||
Common stock equivalent value | 1,586,109 | ||||||||
The following table summarizes the Company's activity and fair value calculations of its derivative notes payable for the nine months ended September 30, 2013: | |||||||||
Linked Common | Bifurcated Compound Embedded Derivatives | Convertible Notes Payable, Carried at Fair Value | |||||||
Shares to | |||||||||
Convertible Notes Payable | |||||||||
Balance, December 31, 2012 | 537,146 | $ | 11,817 | $ | — | ||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 6,042,000 | — | 820,202 | ||||||
Conversion of notes into common stock | (6,903,872 | ) | (12,461 | ) | (1,586,109 | ) | |||
Change in fair value of derivatives | 324,726 | 644 | 765,907 | ||||||
Balance, September 30, 2013 | — | $ | — | $ | — | ||||
The common stock was valued at the trading market price on the date of the valuation. The warrants were valued using a Binomial model using inputs as detailed above under the Binomial Assumptions table. | |||||||||
$520,000 Notes Payable: | |||||||||
On June 7, June 14, July 25, and August 12, 2013, the Company entered into additional unsecured loan agreements with Mr. Brady. Pursuant to these agreements, the Company received short-term loans totaling $520,000 due on August 31, 2013. The notes bore interest at 7% per annum with a default rate of interest at 12% based on a 360-day year. Although the notes did not contain a conversion feature, the Company permitted Mr. Brady to convert the $520,000 principal into shares of common stock on the same terms and conditions as were applicable to the other investors in the 2013 Private Placement. The difference between the carrying amount of the original notes and accrued interest of $523,016 was compared to the $1,082,642 fair value of the 2,092,064 shares of common stock and 2,092,064 warrants received on August 15, 2013 and since the transaction is considered to be with a related party, the difference of $559,626 was treated as a capital transaction and is included in additional paid-in capital as of September 30, 2013. The common stock equivalent value was based on the calculated indexed shares, the fair value of the common stock on the valuation date, and the fair value of the warrants using a binomial lattice model. | |||||||||
Fair value measurements | |||||||||
Assets and liabilities that are recorded at fair value on a recurring basis are measured in accordance with ASC 820-10-05, Fair Value Measurements. The Brian Brady Promissory Notes originally issued April 11, 2013 and May 22, 2013 and modified on May 31, 2013 to extend the term and add a conversion feature are classified within Level 3 of the fair value hierarchy as they were valued using unobservable inputs including significant assumptions of the Company and other market participants. | |||||||||
The reconciliation of our derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2013 is as follows: | |||||||||
Convertible Notes Payable, Carried at Fair Value | |||||||||
Balance, December 31, 2012 | $ | — | |||||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 820,202 | ||||||||
Total loss included in earnings | 765,907 | ||||||||
Balance upon conversion, August 15, 2013 | $ | 1,586,109 | |||||||
Compound Embedded Derivative | |||||||||
The Company concluded that the compound embedded derivative in its $550,000 senior secured promissory note issued on February 3, 2012 and its $75,000 convertible promissory note as modified on June 6, 2012 (see Note 2) required bifurcation and liability classification as derivative financial instruments because they were not considered indexed to the Company's own stock as defined in ASC 815, Derivatives and Hedging. The noteholders did not elect to convert the $75,000 convertible promissory note prior its maturity date on December 4, 2012. Therefore, the conversion feature expired and no further derivative valuation is required. On February 4, 2013, the Company satisfied all of its remaining obligations under its $550,000 senior secured promissory note when the noteholders converted the final balance owed of $112,150 into 773,983 shares of common stock at an average conversion rate of $.145 per share. The Company recorded the $12,461 value of the compound embedded derivative on the conversion date as a charge to additional paid-in capital. As of February 4, 2013, all convertible notes in which the conversion feature had been bifurcated and recorded at fair value, had been converted. The Company recorded expense resulting from the change in the fair value of the compound embedded derivatives during the nine months ended September 30, 2013 in the amount of $644. The Company recorded expense resulting from the change in the fair value of the compound embedded derivatives during the three and nine months ended September 30, 2012 in the amount of $39,257 and $56,989, respectively. | |||||||||
The Monte Carlo Simulation (“MCS”) technique was used to calculate the fair value of the compound embedded derivatives because it provides for the necessary assumptions and inputs. The MCS technique, which is an option-based model, is a generally accepted valuation technique for valuing embedded conversion features in hybrid convertible notes, because it is an open-ended valuation model that embodies all significant assumption types, and ranges of assumption inputs that the Company agrees would likely be considered in connection with the arms-length negotiation related to the transference of the instrument by market participants. In addition to the typical assumptions in a closed-end option model, such as volatility and a risk free rate, MCS incorporates assumptions for interest risk, credit risk and redemption behavior. In addition, MCS breaks down the time to expiration into potentially a large population of time intervals and steps. However, there may be other circumstances or considerations, other than those addressed herein, that relate to both internal and external factors that would be considered by market participants as it relates specifically to the Company and the subject financial instruments. The effects, if any, of these considerations cannot be reasonably measured, quantified or qualified. | |||||||||
The following table shows the summary calculations arriving at the compound embedded derivative value as of December 31, 2012 and on the final conversion date of February 4, 2013. See the assumption details for the composition of these calculations. | |||||||||
Compound Embedded Derivative | December 31, | February 4, | |||||||
2012 | 2013 | ||||||||
Notional amount | $ | 106,355 | $ | 112,150 | |||||
Conversion price | 0.198 | 0.145 | |||||||
Linked common shares (1) | 537,146 | 773,983 | |||||||
MCS value per linked common share (2) | 0.022 | 0.016 | |||||||
Total | $ | 11,817 | $ | 12,461 | |||||
(1) The Compound Embedded Derivative is linked to a variable number of common shares based upon a percentage of the Company's closing stock price as reflected in the over-the-counter market. The number of linked shares increased as the trading market price decreased and decreased as the trading market price increased. | |||||||||
(2) The Note embodied a contingent conversion feature that was predicated upon a financing transaction that was planned for a date between the issuance date and March 2, 2012. If the financing occurred, the maturity date of the Note was August 2, 2012. If the financing did not occur, the maturity date of the Note was February 2, 2013. While, in hindsight, the financing did not occur, the calculation of value must consider that on the issuance date the contingency was present and resulted in multiple scenarios of outcome as it related to the conversion feature subject to bifurcation. The mechanism for building this contingency into the MCS value was to perform two separate calculations of value and weight them on a reasonable basis. | |||||||||
The significant inputs into the Monte Carlo Simulation used to calculate the compound embedded derivative values as of December 31, 2012 and on the final conversion date of February 4, 2013 are as follows: | |||||||||
Monte Carlo Assumptions | December 31, | February 4, | |||||||
2012 | 2013 (7) | ||||||||
Fair market value of asset (1) | $0.22 | $0.16 | |||||||
Conversion price | $0.20 | $0.14 | |||||||
Term (2) | 0.09 years | n/a | |||||||
Implied expected life (3) | 0.09 years | n/a | |||||||
Volatility range of inputs (4) | 16.12%--40.17% | n/a | |||||||
Equivalent volatility (3) | 30.70% | n/a | |||||||
Risk adjusted interest rate range of inputs (5) | 10.00% | n/a | |||||||
Equivalent risk-adjusted interest rate (3) | 10.00% | n/a | |||||||
Credit risk-adjusted interest rate (6) | 15.63% | n/a | |||||||
(1) The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||||
(2) The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||||
(3) The implied expected life, and equivalent volatility and risk-free risk-adjusted interest rate amounts are derived from the MCS. | |||||||||
(4) The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2) above. | |||||||||
(5) CED's bifurcated from debt instruments are expected to contain an element of market interest risk. That is, the risk that market driven interest rates will change during the term of a fixed rate debt instrument. | |||||||||
(6) The Company utilized a yield approach in developing its credit risk assumption. The yield approach assumes that the investor's yield on the instrument embodies a risk component, generally, equal to the difference between the actual yield and the yield for a similar instrument without regard to risk. | |||||||||
(7) Monte Carlo inputs are "n/a" on expiration date of February 4, 2013 since only intrinsic value remains. There is no time value left, so the use of an option model is not necessary. | |||||||||
Schedule of Compound Embedded Derivative [Table Text Block] | ' | ||||||||
The following table shows the summary calculations arriving at the compound embedded derivative value as of December 31, 2012 and on the final conversion date of February 4, 2013. See the assumption details for the composition of these calculations. | |||||||||
Compound Embedded Derivative | December 31, | February 4, | |||||||
2012 | 2013 | ||||||||
Notional amount | $ | 106,355 | $ | 112,150 | |||||
Conversion price | 0.198 | 0.145 | |||||||
Linked common shares (1) | 537,146 | 773,983 | |||||||
MCS value per linked common share (2) | 0.022 | 0.016 | |||||||
Total | $ | 11,817 | $ | 12,461 | |||||
(1) The Compound Embedded Derivative is linked to a variable number of common shares based upon a percentage of the Company's closing stock price as reflected in the over-the-counter market. The number of linked shares increased as the trading market price decreased and decreased as the trading market price increased. | |||||||||
(2) The Note embodied a contingent conversion feature that was predicated upon a financing transaction that was planned for a date between the issuance date and March 2, 2012. If the financing occurred, the maturity date of the Note was August 2, 2012. If the financing did not occur, the maturity date of the Note was February 2, 2013. While, in hindsight, the financing did not occur, the calculation of value must consider that on the issuance date the contingency was present and resulted in multiple scenarios of outcome as it related to the conversion feature subject to bifurcation. The mechanism for building this contingency into the MCS value was to perform two separate calculations of value and weight them on a reasonable basis. | |||||||||
Binomial Lattice Option Valuation Technique [Member] | ' | ||||||||
Derivative [Line Items] | ' | ||||||||
Schedule of Price Risk Derivatives [Table Text Block] | ' | ||||||||
The Company's warrants were valued on the applicable dates using a Binomial Lattice Option Valuation Technique (“Binomial”). Significant inputs into this technique as of December 31, 2012, May 31, 2013, August 15, 2013 - September 23, 2013 and September 30, 2013 are as follows: | |||||||||
Binomial Assumptions | December 31, | May 31, | August 15, 2013 - September 23, 2013 | September 30, | |||||
2012 | 2013 | 2013 | |||||||
Fair market value of asset (1) | $0.22 | $0.20 | $0.28-$0.37 | $0.33 | |||||
Exercise price | $1.25 | $0.25-$0.50 | $0.25-$0.50 | $0.25-$1.25 | |||||
Term (2) | 4.7 years | 5.0 years | 5.0 years | 3.9 years - 4.9 years | |||||
Implied expected life (3) | 4.6 years | 5.0 years | 5.0 years | 3.9 years - 4.9 years | |||||
Volatility range of inputs (4) | 45.82%--84.21% | 50.14%--83.49% | 48.46%--81.72% | 50.38%--80.40% | |||||
Equivalent volatility (3) | 60.20% | 59.15% | 56.57%--57.55% | 54.84%--56.50% | |||||
Risk-free interest rate range of inputs (5) | 0.11%--0.72% | 1.07%--1.05% | 0.04%--1.72% | 0.02%--1.39% | |||||
Equivalent risk-free interest rate (3) | 0.32% | 0.43% | 0.56%--0.69% | 0.32%--0.52% | |||||
(1) The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||||
(2) The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||||
(3) The implied expected life, and equivalent volatility and risk-free interest rate amounts are derived from the binomial. | |||||||||
(4) The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2), above. | |||||||||
(5) The risk-free rates used for inputs represent the yields on zero coupon US Government Securities with periods to maturity consistent with the intervals described in (2), above. | |||||||||
Common Stock Indexed Fair Value Based on Calculated Indexed Shares [Text Block] | ' | ||||||||
As of the date of modification, May 31, 2013, the common stock equivalent value was estimated as follows: | |||||||||
Indexed Shares | Fair Value per Share | Estimated Fair Value | |||||||
Common stock | 3,021,000 | $ | 0.2 | 604,200 | |||||
Warrants - $0.25 exercise price | 1,510,500 | $ | 0.088 | 132,924 | |||||
Warrants - $0.50 exercise price | 1,510,500 | $ | 0.055 | 83,078 | |||||
Common stock equivalent value | 820,202 | ||||||||
On the conversion date of August 15, 2013, the common stock equivalent value was estimated as follows: | |||||||||
Indexed Shares | Fair Value per Share | Estimated Fair Value | |||||||
Common stock | 3,064,944 | $ | 0.35 | 1,072,730 | |||||
Warrants - $0.25 exercise price | 1,532,472 | $ | 0.199 | 304,962 | |||||
Warrants - $0.50 exercise price | 1,532,472 | $ | 0.136 | 208,417 | |||||
Common stock equivalent value | 1,586,109 | ||||||||
Monte Carlo Simulation Technique [Member] | ' | ||||||||
Derivative [Line Items] | ' | ||||||||
Schedule of Price Risk Derivatives [Table Text Block] | ' | ||||||||
The significant inputs into the Monte Carlo Simulation used to calculate the compound embedded derivative values as of December 31, 2012 and on the final conversion date of February 4, 2013 are as follows: | |||||||||
Monte Carlo Assumptions | December 31, | February 4, | |||||||
2012 | 2013 (7) | ||||||||
Fair market value of asset (1) | $0.22 | $0.16 | |||||||
Conversion price | $0.20 | $0.14 | |||||||
Term (2) | 0.09 years | n/a | |||||||
Implied expected life (3) | 0.09 years | n/a | |||||||
Volatility range of inputs (4) | 16.12%--40.17% | n/a | |||||||
Equivalent volatility (3) | 30.70% | n/a | |||||||
Risk adjusted interest rate range of inputs (5) | 10.00% | n/a | |||||||
Equivalent risk-adjusted interest rate (3) | 10.00% | n/a | |||||||
Credit risk-adjusted interest rate (6) | 15.63% | n/a | |||||||
(1) The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||||
(2) The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||||
(3) The implied expected life, and equivalent volatility and risk-free risk-adjusted interest rate amounts are derived from the MCS. | |||||||||
(4) The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2) above. | |||||||||
(5) CED's bifurcated from debt instruments are expected to contain an element of market interest risk. That is, the risk that market driven interest rates will change during the term of a fixed rate debt instrument. | |||||||||
(6) The Company utilized a yield approach in developing its credit risk assumption. The yield approach assumes that the investor's yield on the instrument embodies a risk component, generally, equal to the difference between the actual yield and the yield for a similar instrument without regard to risk. | |||||||||
(7) Monte Carlo inputs are "n/a" on expiration date of February 4, 2013 since only intrinsic value remains. There is no time value left, so the use of an option model is not necessary. | |||||||||
Warrant [Member] | ' | ||||||||
Derivative [Line Items] | ' | ||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | ' | ||||||||
The following table summarizes the Company's activity and fair value calculations of its derivative warrants for the nine months ended September 30, 2013: | |||||||||
Linked Common | Warrant | ||||||||
Shares to | Liability | ||||||||
Derivative Warrants | |||||||||
Balance, December 31, 2012 | 128,350 | $ | 2,750 | ||||||
Issuance of warrants to investors in 2013 Private Placement | 14,236,472 | 2,344,899 | |||||||
Exchange of warrants for common stock | (4,546 | ) | — | ||||||
Change in fair value of derivatives | — | (207,682 | ) | ||||||
Balance, September 30, 2013 | 14,360,276 | $ | 2,139,967 | ||||||
Debt [Member] | ' | ||||||||
Derivative [Line Items] | ' | ||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | ' | ||||||||
The following table summarizes the Company's activity and fair value calculations of its derivative notes payable for the nine months ended September 30, 2013: | |||||||||
Linked Common | Bifurcated Compound Embedded Derivatives | Convertible Notes Payable, Carried at Fair Value | |||||||
Shares to | |||||||||
Convertible Notes Payable | |||||||||
Balance, December 31, 2012 | 537,146 | $ | 11,817 | $ | — | ||||
Issuance of $750,000 promissory note with compound embedded derivative - May 31, 2013 | 6,042,000 | — | 820,202 | ||||||
Conversion of notes into common stock | (6,903,872 | ) | (12,461 | ) | (1,586,109 | ) | |||
Change in fair value of derivatives | 324,726 | 644 | 765,907 | ||||||
Balance, September 30, 2013 | — | $ | — | $ | — | ||||
Stockholders_Deficit_Tables
Stockholders' Deficit (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | ||||||||
A summary of option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2012 and the nine months ended September 30, 2013 is presented below: | |||||||||
Options Outstanding | Common Shares | Weighted Average | Weighted Average | ||||||
Exercise Price | Remaining Life | ||||||||
(Years) | |||||||||
Outstanding at December 31, 2011 | 114,445 | $ | 17.61 | 4.4 | |||||
Granted | 378,293 | 5.74 | |||||||
Exercised | (551 | ) | 2 | ||||||
Forfeited | (100,210 | ) | 18.81 | ||||||
Outstanding at December 31, 2012 | 391,977 | $ | 5.87 | 4.3 | |||||
Granted | 7,640,062 | 0.25 | |||||||
Exercised | — | — | |||||||
Forfeited | (1,111,013 | ) | 0.45 | ||||||
Outstanding at September 30, 2013 | 6,921,026 | $ | 0.54 | 8.8 | |||||
Exercisable at September 30, 2013 | 1,611,198 | $ | 0.89 | 8.8 | |||||
Stock Options [Member] | ' | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ||||||||
Schedule of Nonvested Share Activity [Table Text Block] | ' | ||||||||
A summary of the nonvested stock option activity under the 2011 Equity Incentive Plans for the year ended December 31, 2012 and the nine months ended September 30, 2013 is presented below: | |||||||||
Nonvested Options | Common Shares | Weighted Average | Weighted Average | ||||||
Grant Date | Remaining Years | ||||||||
Fair Value | to Vest | ||||||||
Nonvested at December 31, 2011 | 57,516 | $ | 2.73 | 2.5 | |||||
Granted | 378,293 | 2.17 | |||||||
Vested | (83,429 | ) | 2.26 | ||||||
Forfeited | (43,753 | ) | 2.78 | ||||||
Nonvested at December 31, 2012 | 308,627 | $ | 2.17 | 2.9 | |||||
Granted | 7,640,062 | 0.2 | |||||||
Vested | (1,541,284 | ) | 0.37 | ||||||
Forfeited | (1,097,577 | ) | 0.21 | ||||||
Nonvested at September 30, 2013 | 5,309,828 | $ | 0.27 | 3.6 | |||||
Restricted Stock [Member] | ' | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ||||||||
Schedule of Nonvested Share Activity [Table Text Block] | ' | ||||||||
The following tables contain summarized information about nonvested restricted stock outstanding at September 30, 2013: | |||||||||
Restricted Stock | Common Shares | ||||||||
Nonvested at December 31, 2011 | — | ||||||||
Granted | 312,387 | ||||||||
Vested | (263,805 | ) | |||||||
Forfeited | — | ||||||||
Nonvested at December 31, 2012 | 48,582 | ||||||||
Granted | 1,133,090 | ||||||||
Vested | (1,181,672 | ) | |||||||
Forfeited | — | ||||||||
Nonvested at September 30, 2013 | — | ||||||||
Loss_Per_Common_Share_Tables
Loss Per Common Share (Tables) | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Earnings Per Share [Abstract] | ' | ||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | ' | ||||||
Net losses were reported during the three and nine months ended September 30, 2013 and 2012. As such, the Company excluded the following items from the computation of diluted loss per common share as their effect would be anti-dilutive: | |||||||
Three and Nine Months Ended | |||||||
September 30, | September 30, | ||||||
2013 | 2012 | ||||||
Stock options | 6,921,026 | 393,494 | |||||
Warrants | 18,605,999 | 128,434 | |||||
Restricted stock units | 1,819,400 | — | |||||
Potential conversion of Series A convertible preferred stock | 3,788 | 3,788 | |||||
Potential conversion of promissory notes payable | — | 789,142 | |||||
Total excluded shares | 27,350,213 | 1,314,858 | |||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Reverse Stock Split (Details) | 0 Months Ended | |||
Jul. 30, 2012 | Sep. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Stockholders' Equity Note, Stock Split, Conversion Ratio | 40 | ' | ' | ' |
Common stock, shares authorized (shares) | ' | 100,000,000 | 100,000,000 | 100,000,000 |
Stockholders' equity, reverse stock split | 'All current and historical information contained herein related to the share and per share information for the Company's common stock or stock equivalents issued on or after May 12, 2011 reflects the 1-for-40 reverse stock split of the Company's outstanding shares of common stock that became market effective on August 1, 2012. | ' | ' | ' |
Scenario, Previously Reported [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Common stock, shares authorized (shares) | 500,000,000 | ' | ' | ' |
Reverse Stock Split [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Common stock, shares authorized (shares) | 12,500,000 | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Going Concern and Management's Plan (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||
Sep. 30, 2013 | Sep. 23, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Aug. 15, 2013 | Sep. 23, 2013 | Aug. 15, 2013 | 31-May-13 | Sep. 23, 2013 | Sep. 23, 2013 | Sep. 30, 2013 | 16-May-13 | Jan. 03, 2013 | Jul. 02, 2012 | |
Common Stock [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.50 exercise price [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | |||||||||
Class of Warrant or Right [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Expiration Period | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | '5 years | '5 years | '5 years | ' | ' | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | ' | ' | ' | ' | ' | 349,464 | ' | ' | ' | 7,118,236 | 7,118,236 | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.25 | 0.5 | ' | ' | ' | ' |
Stock Issued during period, shares, issued for services | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 823,090 | 30,000 | 20,000 | 71,221 |
Share Price, Restricted Stock Granted for Services, Per Share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.35 | ' | ' | ' |
Legal Fees Reduction, Settled by Issuance of Restricted Stock | $288,081 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, New Issues | ' | ' | ' | ' | ' | ' | ' | ' | 8,730,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Share Price | ' | ' | ' | ' | ' | ' | ' | ' | $0.25 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | 1,376,618 | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of notes payable into common stock (shares) | ' | ' | ' | ' | ' | ' | ' | ' | 5,506,472 | ' | ' | ' | ' | ' | ' | ' | ' |
Period Where There Has Been Volatility In Trading Price of Stock | ' | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated deficit | 25,556,024 | ' | 25,556,024 | ' | 25,556,024 | ' | 22,803,422 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | 975,302 | 951,570 | 2,752,602 | 3,708,149 | 4,672,638 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Issuance of Private Placement | ' | $2,182,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies - Accounts Receivable and Concentration of Credit Risk (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Mar. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | |
customer | customer | customer | customer | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Accounts receivable, number of major customers (customers) | 2 | ' | 2 | 2 |
Accounts receivable, major customer (percentage) | 38.00% | ' | 38.00% | 46.00% |
Revenue, number of major customer (customers) | 2 | 0 | 1 | ' |
Revenue, major customer (percentage) | 33.00% | ' | 13.00% | ' |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies - Property and Equipment (Details) | 9 Months Ended |
Sep. 30, 2013 | |
Equipment [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Property, plant and equipment, useful life (in years) | '3 years |
Furniture and Fixtures [Member] | Minimum [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Property, plant and equipment, useful life (in years) | '5 years |
Furniture and Fixtures [Member] | Maximum [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Property, plant and equipment, useful life (in years) | '10 years |
Software [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Property, plant and equipment, useful life (in years) | '3 years |
Leasehold Improvements [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Property, plant and equipment, useful life (in years) | '3 years |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies - Software Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' | ' |
Software development costs | $146,031 | $244,878 |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 9 Months Ended |
Sep. 30, 2013 | |
Minimum [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Revenue recognition requisite period (in days) | '3 days |
Maximum [Member] | ' |
Significant Accounting Policies [Line Items] | ' |
Revenue recognition requisite period (in days) | '30 days |
Summary_of_Significant_Account9
Summary of Significant Accounting Policies - Advertising Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Advertising expense | $12,000 | $60,000 | $56,000 | $359,000 |
Recovered_Sheet1
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Current average expected forfeiture rate (percentage) | 50.21% | ' | 50.21% | ' |
Equity Incentive 2011 Plan [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Expected term (in years) | '10 years | '5 years | '9 years | '5 years |
Weighted average volatility (percentage) | 51.72% | 54.46% | 52.02% | 54.90% |
Weighted average risk free interest rate (percentage) | 2.74% | 0.65% | 2.27% | 0.75% |
Expected dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Notes_Payable_Related_Parties_
Notes Payable - Related Parties (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | 0 Months Ended | ||||||||
Feb. 04, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | Feb. 04, 2013 | Feb. 03, 2012 | Dec. 31, 2012 | 4-May-12 | Aug. 15, 2013 | Sep. 23, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | |
Senior Secured Promissory Note [Member] | Senior Secured Promissory Note [Member] | Senior Secured Promissory Note [Member] | Convertible Promissory Note [Member] | Convertible Promissory Note [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | ||||
shareholder | units | Convertible Promissory Note - Principal [Member] | Convertible Promissory Note - Accrued Interest [Member] | Convertible Promissory Note [Member] | Director [Member] | Director [Member] | Director [Member] | |||||||||
Unsecured Debt - Principal [Member] | Unsecured Debt - Accrued Interest [Member] | |||||||||||||||
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | 349,464 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, face amount (in dollars) | ' | ' | ' | ' | $550,000 | ' | $75,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, unamortized discount | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, fee amount | ' | ' | ' | ' | 3,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance cost | ' | ' | ' | ' | 21,800 | ' | 6,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from debt, net of issuance costs | ' | ' | ' | ' | 474,700 | ' | 69,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, convertible, conversion percentage (percentage) | ' | ' | ' | ' | 90.00% | ' | 90.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | 112,150 | ' | 437,850 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of notes payable into common stock (shares) | 6,903,872 | ' | ' | 773,983 | ' | 2,069,439 | ' | ' | ' | 773,983 | ' | ' | ' | ' | ' | ' |
Debt instrument, convertible, conversion price (per share) | ' | ' | ' | $0.14 | ' | $0.21 | $5 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, maturity period (in days) | ' | ' | ' | ' | ' | ' | '30 days | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Number of Existing Shareholders Issued Promissory Note | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of trading days prior to conversion date (in days) | ' | ' | ' | ' | ' | ' | '10 days | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, interest rate, stated percentage (percentage) | ' | ' | ' | ' | ' | ' | 8.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, debt default, percentage (percentage) | ' | ' | ' | ' | ' | ' | 18.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Induced Conversion of Convertible Debt Expense | ' | 93,482 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | $1,376,618 | ' | $75,000 | $12,366 | ' | ' | $1,270,000 | $19,252 |
Conversion of Convertible Securities, Investment Units | ' | ' | ' | ' | ' | ' | ' | 3.5 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion of Convertible Securities | ' | ' | ' | ' | ' | ' | ' | ' | 5,506,472 | ' | ' | ' | 349,464 | 5,157,008 | ' | ' |
Notes_Payable_Bridge_Bank_Cred
Notes Payable - Bridge Bank Credit Agreement (Details) (Secured Line of Credit Facility [Member], USD $) | 0 Months Ended | |
Mar. 01, 2013 | Sep. 30, 2013 | |
Secured Line of Credit Facility [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Eligible securitization percentage of accounts receivable (percentage) | 80.00% | ' |
Line of credit facility, maximum borrowing capacity | $1,500,000 | ' |
Debt instrument, annual facility fee | 7,500 | ' |
Line of credit facility, commitment fee percentage (percentage) | 0.50% | ' |
Line of credit facility, annual due dilligence fee | 1,000 | ' |
Debt Instrument, description of variable rate basis | 'prime rate plus 2% | ' |
Debt instrument, description of default rate of interest | 'prime plus 7% | ' |
Line of credit facility, termination fee | 18,750 | ' |
Line of credit facility, early termination credit limit percentage (percentage) | 1.00% | ' |
Line of credit facility, early termination fee calculation denominator (percentage) | 80.00% | ' |
Debt issuance cost | 31,301 | ' |
Debt issuance cost amortization period (in years) | '1 year | ' |
Line of Credit Facility, Amount Outstanding | ' | $0 |
Notes_Payable_Brian_Brady_Prom
Notes Payable - Brian Brady Promissory Notes (Details) (USD $) | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 1 Months Ended | 0 Months Ended | ||||
Aug. 15, 2013 | 22-May-13 | Aug. 15, 2013 | 22-May-13 | Aug. 12, 2013 | Aug. 12, 2013 | Sep. 23, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | |
Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Director [Member] | Common Stock [Member] | Common Stock [Member] | Unsecured Debt - Principal [Member] | Unsecured Debt - Accrued Interest [Member] | |
Unsecured Debt [Member] | Director [Member] | Common Stock [Member] | Common Stock [Member] | |||||||
Director [Member] | Director [Member] | |||||||||
Short-term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Short-term loan | ' | ' | ' | $750,000 | $520,000 | $1,270,000 | ' | ' | ' | ' |
Debt instrument, default interest rate (percentage) | ' | ' | ' | ' | 12.00% | 12.00% | ' | ' | ' | ' |
Debt instrument, interest rate, stated percentage (percentage) | ' | ' | ' | ' | 7.00% | 7.00% | ' | ' | ' | ' |
Warrants issued to purchase shares | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' |
Warrants issued to purchase shares, exercise price (per share) | ' | ' | $0.25 | $0.25 | ' | ' | ' | ' | ' | ' |
Warrant conversion period to purchase shares (in years) | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' |
Additional warrants issued to purchase shares (shares) | ' | ' | 3,187,500 | 3,187,500 | ' | ' | ' | ' | ' | ' |
Shares granted in period (shares) | 1,687,500 | 1,687,500 | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, award vesting period (in years) | '2 years | ' | ' | '2 years | ' | ' | ' | ' | ' | ' |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | ' | ' | ' | $1,376,618 | ' | $1,270,000 | $19,252 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | ' | ' | ' | ' | ' | ' | 5,506,472 | 5,157,008 | ' | ' |
Notes_Payable_Details
Notes Payable (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Debt Disclosure [Abstract] | ' | ' | ' | ' |
Interest Expense, Notes Payable | $3,998 | $24,138 | $22,397 | $52,840 |
Amortization of Financing Costs | $7,826 | $7,666 | $20,137 | $18,700 |
Derivative_Financial_Instrumen2
- Derivative Financial Instruments (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
31-May-13 | Feb. 04, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 15, 2013 | Dec. 31, 2012 | Jul. 31, 2011 | |
Linked Common Shares to Derivative Warrants [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Linked common shares to derivative warrants, beginning balance (shares) | ' | ' | ' | ' | ' | ' | ' | ' | 250 |
Linked common shares to derivative warrants, ending balance (shares) | ' | ' | ' | ' | ' | ' | ' | ' | 250 |
Warrant Liability [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant liability beginning balance | ' | ' | ' | ' | $2,750 | ' | ' | ' | ' |
Change in fair value of derivative | ' | ' | 207,462 | 10,903 | 207,682 | 738,628 | ' | ' | ' |
Warrant liability ending balance | ' | ' | 2,139,967 | ' | 2,139,967 | ' | ' | ' | ' |
Linked common shares to promissory notes beginning balance | ' | ' | ' | ' | 537,146 | ' | ' | ' | ' |
Increase (Decrease) in the Number of Shares Linked to Promissory Notes Embedded Derivatives | 6,042,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of notes payable into common stock (shares) | ' | -6,903,872 | ' | ' | ' | ' | ' | ' | ' |
Linked common shares to promissory notes, change in fair value of derivatives (shares) | ' | ' | 324,726 | ' | 324,726 | ' | ' | ' | ' |
Linked common shares to promissory notes ending balance | ' | ' | 0 | ' | 0 | ' | ' | ' | ' |
Compound embedded derivative | ' | 12,461 | 0 | ' | 0 | ' | ' | 11,817 | ' |
Compound embedded derviative, issuance of promissory note | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Compound embedded derivatives,change in fair value of derivatives | ' | ' | 644 | ' | 644 | ' | ' | ' | ' |
Fair value of convertible notes beginning balance | ' | ' | ' | ' | 0 | ' | 1,586,109 | ' | ' |
Fair value of convertible notes payable | 820,202 | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of convertible notes payable, change in derivative fair value | ' | ' | 422,554 | ' | 765,907 | ' | ' | ' | ' |
Fair value of convertible notes ending balance | ' | ' | 0 | ' | 0 | ' | 1,586,109 | ' | ' |
Warrant [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Linked Common Shares to Derivative Warrants [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Linked common shares to derivative warrants, beginning balance (shares) | ' | ' | ' | ' | 128,350 | ' | ' | ' | ' |
Class of Warrant or Right, Issuance of Warrants to Investors in Private Placement | ' | ' | ' | ' | 14,236,472 | ' | ' | ' | ' |
Issuance of warrants with preferred stock financing | ' | ' | ' | ' | -4,546 | ' | ' | ' | ' |
Change in fair value of derivatives | ' | ' | ' | ' | 0 | ' | ' | ' | ' |
Linked common shares to derivative warrants, ending balance (shares) | ' | ' | 14,360,276 | ' | 14,360,276 | ' | ' | ' | ' |
Warrant Liability [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant liability beginning balance | ' | ' | ' | ' | 2,750 | ' | ' | ' | ' |
Fair Value of Warrants Issued to Investors in Private Placement | ' | ' | ' | ' | 2,344,899 | ' | ' | ' | ' |
Fair value of warrants issued with preferred stock financing | ' | ' | ' | ' | 0 | ' | ' | ' | ' |
Change in fair value of derivative | ' | ' | ' | ' | -207,682 | ' | ' | ' | ' |
Warrant liability ending balance | ' | ' | 2,139,967 | ' | 2,139,967 | ' | ' | ' | ' |
Convertible Notes Payable [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant Liability [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of convertible notes, conversion of notes into common stock | ' | ' | ($1,586,109) | ' | ($1,586,109) | ' | ' | ' | ' |
Derivative_Financial_Instrumen3
Derivative Financial Instruments - Warrants Liability (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | ||||||||||
Feb. 04, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 15, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | Jul. 31, 2011 | 31-May-11 | Sep. 11, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Feb. 04, 2013 | Mar. 31, 2013 | Sep. 23, 2013 | Sep. 23, 2013 | |
warrantholder | May 2011 Offering [Member] | September 2012 Offering [Member] | Warrant [Member] | Warrant [Member] | Private Transaction with Nineteen Warrant Holders [Member] | Private Transaction with Nineteen Warrant Holders [Member] | Private Transaction with Nineteen Warrant Holders [Member] | Private Transaction with a Warrant Holder [Member] | Private Transaction with a Warrant Holder [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.50 exercise price [Member] | |||||||||
Derivative [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares linked to derivative warrants (shares) | ' | ' | ' | ' | ' | ' | ' | ' | 250 | 153,882 | ' | 14,360,276 | 128,350 | ' | ' | ' | ' | ' | ' | ' |
Issuance of warrants, public offering (shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 110,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Number of Warrant Holders | ' | ' | ' | ' | ' | ' | ' | 19 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of notes payable into common stock (shares) | 6,903,872 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 123,052 | ' | ' | 5,001 | ' | ' | ' |
Loss on exchange of warrants and debt | ' | ($93,482) | ($37,610) | ($94,214) | ($802,123) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ($802,123) | ($802,123) | ' | ($732) | ' | ' |
Change in fair value of derivative | ' | 207,462 | 10,903 | 207,682 | 738,628 | ' | ' | ' | ' | ' | ' | -207,682 | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant liability | ' | 2,139,967 | ' | 2,139,967 | ' | ' | 2,750 | ' | ' | ' | ' | 2,139,967 | 2,750 | ' | ' | ' | ' | ' | ' | ' |
Issuance of warrants with preferred stock financing | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,546 | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants issued with preferred stock financing | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Change in fair value of warrant derivatives | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0 | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | ' | ' | ' | 349,464 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,118,236 | 7,118,236 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.25 | 0.5 |
Derivative_Financial_Instrumen4
Derivative Financial Instruments - Binomial Assumptions (Details) (Warrant [Member], Binomial Lattice Option Valuation Technique [Member], USD $) | 0 Months Ended | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
31-May-13 | Sep. 23, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |||||
Derivative [Line Items] | ' | ' | ' | ' | ||||
Fair market value of asset (per share) | $0.20 | [1] | ' | $0.33 | 0.22 | [1] | ||
Exercise price (per share) | ' | ' | ' | 1.25 | ||||
Term (in years) | '5 years 0 months | [2] | '5 years 0 months | [2] | ' | '4 years 8 months | [2] | |
Implied expected life (in years) | '5 years 0 months | [3] | '5 years 0 months | [3] | ' | '4 years 7 months | [3] | |
Equivalent volatility (percentage) | 59.15% | [3] | ' | ' | 60.20% | [3] | ||
Equivalent risk-free interest rate (percentage) | 0.43% | [3] | ' | ' | 0.32% | [3] | ||
Minimum [Member] | ' | ' | ' | ' | ||||
Derivative [Line Items] | ' | ' | ' | ' | ||||
Fair market value of asset (per share) | ' | $0.28 | [1] | ' | ' | |||
Exercise price (per share) | $0.25 | $0.25 | $0.25 | ' | ||||
Term (in years) | ' | ' | '3 years 10 months 24 days | [2] | ' | |||
Implied expected life (in years) | ' | ' | '3 years 10 months 24 days | [3] | ' | |||
Volatility range of inputs (percentage) | 50.14% | [4] | 56.57% | [3] | 54.84% | [3] | 45.82% | [4] |
Equivalent volatility (percentage) | ' | 48.46% | [4] | 50.38% | [4] | ' | ||
Risk-free interest rate range of inputs (percentage) | 1.05% | [5] | 0.04% | [5] | 0.02% | [5] | 0.11% | [5] |
Equivalent risk-free interest rate (percentage) | ' | 0.56% | [3] | 0.32% | [3] | ' | ||
Maximum [Member] | ' | ' | ' | ' | ||||
Derivative [Line Items] | ' | ' | ' | ' | ||||
Fair market value of asset (per share) | ' | $0.37 | [1] | ' | ' | |||
Exercise price (per share) | $0.50 | $0.50 | $1.25 | ' | ||||
Term (in years) | ' | ' | '4 years 10 months 24 days | [2] | ' | |||
Implied expected life (in years) | ' | ' | '4 years 10 months 24 days | [3] | ' | |||
Volatility range of inputs (percentage) | 83.49% | [4] | 57.55% | [3] | 56.50% | [3] | 84.21% | [4] |
Equivalent volatility (percentage) | ' | 81.72% | [4] | 80.40% | [4] | ' | ||
Risk-free interest rate range of inputs (percentage) | 1.07% | [5] | 1.72% | [5] | 1.39% | [5] | 0.72% | [5] |
Equivalent risk-free interest rate (percentage) | ' | 0.69% | [3] | 0.52% | [3] | ' | ||
[1] | The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||||||
[2] | The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||||||
[3] | The implied expected life, and equivalent volatility and risk-free interest rate amounts are derived from the binomial. | |||||||
[4] | The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2), above. | |||||||
[5] | The risk-free rates used for inputs represent the yields on zero coupon US Government Securities with periods to maturity consistent with the intervals described in (2), above. |
Derivative_Financial_Instrumen5
Derivative Financial Instruments - Convertible Notes-Carried at Fair Value (Details) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 6 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | |||||||||
Mar. 01, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | 31-May-13 | Sep. 30, 2013 | 31-May-13 | 31-May-13 | Sep. 30, 2013 | 31-May-13 | Sep. 30, 2013 | 31-May-13 | Sep. 30, 2013 | Aug. 15, 2013 | 22-May-13 | Aug. 12, 2013 | Aug. 15, 2013 | 22-May-13 | Jun. 30, 2013 | Aug. 15, 2013 | 31-May-13 | Sep. 23, 2013 | Sep. 30, 2013 | Aug. 12, 2013 | Aug. 15, 2013 | Aug. 15, 2013 | |
Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Binomial Lattice Option Valuation Technique [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Additional Paid-in Capital [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Director [Member] | Director [Member] | Director [Member] | Common Stock [Member] | |||||
Common Stock [Member] | Common Stock [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.50 exercise price [Member] | Warrants - $0.50 exercise price [Member] | Binomial Lattice Option Valuation Technique [Member] | Unsecured Debt [Member] | Warrants - $0.25 exercise price [Member] | Director [Member] | ||||||||||||||||
Common Stock [Member] | |||||||||||||||||||||||||
Fair Value of Warrants [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Short-term loan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $750,000 | $520,000 | ' | ' | ' | ' | ' | ' | ' | $1,270,000 | ' | ' |
Warrants issued to purchase shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued to purchase shares, exercise price (per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.25 | $0.25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Expiration Period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | '5 years | '5 years | ' | ' | ' | ' |
Additional warrants issued to purchase shares (shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,187,500 | 3,187,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares granted in period (shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,687,500 | 1,687,500 | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, award vesting period (in years) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes payable carried at fair value | ' | 1,586,109 | ' | 820,202 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, convertible, carrying amount of equity component | ' | 770,975 | 523,016 | 755,227 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 559,626 | ' | ' | ' |
Warrants and restricted stock, reserved for furture issuance, value | ' | ' | 1,082,642 | 1,526,202 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion of Convertible Securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,092,064 |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | 349,464 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,118,236 | ' | ' | 2,092,064 | ' |
Number of indexed warrants (in shares) | ' | ' | ' | ' | ' | ' | 3,021,000 | 3,064,944 | 1,510,500 | 1,532,472 | 1,510,500 | 1,532,472 | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' |
Number of indexed warrants, fair value per share | ' | ' | ' | ' | ' | ' | $0.20 | $0.35 | $0.09 | $0.20 | $0.06 | $0.14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of common stock issued | ' | ' | ' | ' | 1,586,109 | 820,202 | 604,200 | 1,072,730 | 132,924 | 304,962 | 83,078 | 208,417 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, interest rate, stated percentage (percentage) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.00% | ' | ' | ' | ' | ' | ' | ' | 7.00% | ' | ' |
Debt instrument, default interest rate (percentage) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' |
Equity, Fair Value Disclosure | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 88,000 | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants issued | 7,209 | 7,209 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 280,500 | ' | ' | ' | ' | ' | ' | ' |
Fair value of stock issued during period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $337,500 | ' | ' | ' | ' | ' | ' | ' |
Derivative_Financial_Instrumen6
Derivative Financial Instruments - Fair Value Measurements (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | 31-May-13 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' | ' | ' |
Fair value of convertible notes beginning balance | ' | $0 | $1,586,109 | ' |
Fair value of convertible notes payable | ' | ' | ' | 820,202 |
Fair value of convertible notes payable, change in derivative fair value | 422,554 | 765,907 | ' | ' |
Fair value of convertible notes ending balance | $0 | $0 | $1,586,109 | ' |
Derivative_Financial_Instrumen7
Derivative Financial Instruments - Compound Embedded Derivative (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||
Feb. 04, 2013 | Sep. 30, 2013 | Mar. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Jun. 06, 2012 | Feb. 04, 2013 | Dec. 31, 2012 | Feb. 04, 2013 | Dec. 31, 2012 | Feb. 03, 2012 | |||
Compound Embedded Derivative [Member] | Compound Embedded Derivative [Member] | Senior Secured Promissory Note [Member] | Senior Secured Promissory Note [Member] | Senior Secured Promissory Note [Member] | |||||||||
Monte Carlo Simulation Technique [Member] | Monte Carlo Simulation Technique [Member] | ||||||||||||
Derivative [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||
Debt instrument, face amount (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $550,000 | ||
Convertible notes payable | ' | ' | ' | ' | ' | 75,000 | ' | ' | ' | ' | ' | ||
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | 112,150 | 437,850 | ' | ||
Conversion of notes payable into common stock (shares) | 6,903,872 | ' | ' | ' | ' | ' | ' | ' | 773,983 | 2,069,439 | ' | ||
Debt instrument, convertible, conversion price (per share) | ' | ' | ' | ' | ' | ' | ' | ' | $0.14 | $0.21 | ' | ||
Compound embedded derivatives, change in fair value of derivatives | ' | 39,257 | -56,989 | -644 | ' | ' | ' | ' | ' | ' | ' | ||
Notional amount | ' | ' | ' | ' | ' | ' | 112,150 | 106,355 | ' | ' | ' | ||
Conversion price (per share) | ' | ' | ' | ' | ' | ' | $0.14 | [1] | $0.20 | ' | ' | ' | |
Linked common shares (shares) | ' | 0 | ' | 0 | 537,146 | ' | 773,983 | [2] | 537,146 | [2] | ' | ' | ' |
MCS value per linked common share (per share) | ' | ' | ' | ' | ' | ' | $0.02 | [3] | $0.02 | [3] | ' | ' | ' |
Compound embedded derivative | $12,461 | $0 | ' | $0 | $11,817 | ' | $12,461 | $11,817 | ' | ' | ' | ||
[1] | Monte Carlo inputs are "n/a" on expiration date of February 4, 2013 since only intrinsic value remains. There is no time value left, so the use of an option model is not necessary. | ||||||||||||
[2] | The Compound Embedded Derivative is linked to a variable number of common shares based upon a percentage of the Company's closing stock price as reflected in the over-the-counter market. The number of linked shares increased as the trading market price decreased and decreased as the trading market price increased. | ||||||||||||
[3] | The Note embodied a contingent conversion feature that was predicated upon a financing transaction that was planned for a date between the issuance date and March 2, 2012. If the financing occurred, the maturity date of the Note was August 2, 2012. If the financing did not occur, the maturity date of the Note was February 2, 2013. While, in hindsight, the financing did not occur, the calculation of value must consider that on the issuance date the contingency was present and resulted in multiple scenarios of outcome as it related to the conversion feature subject to bifurcation. The mechanism for building this contingency into the MCS value was to perform two separate calculations of value and weight them on a reasonable basis. |
Derivative_Financial_Instrumen8
Derivative Financial Instruments - Compound Embedded Derivative - Monte Carlo Assumption (Details) (Monte Carlo Simulation Technique [Member], Compound Embedded Derivative [Member], USD $) | 0 Months Ended | 12 Months Ended | ||
Feb. 04, 2013 | Dec. 31, 2012 | |||
Derivative [Line Items] | ' | ' | ||
Fair market value of asset (per share) | $0.16 | [1],[2] | $0.22 | [1] |
Conversion price (per share) | $0.14 | [2] | $0.20 | |
Term (in years) | ' | '0 years 1 month 1 day | [3] | |
Implied expected life (in years) | ' | '0 years 1 month 1 day | [4] | |
Equivalent volatility (percentage) | ' | 30.70% | [4] | |
Risk adjusted interest rate range of inputs (percentage) | ' | 10.00% | [5] | |
Equivalent risk-adjusted interest rate (percentage) | ' | 10.00% | [4] | |
Credit risk-adjusted interest rate (percentage) | ' | 15.63% | [6] | |
Minimum [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Volatility range of inputs (percentage) | ' | 16.12% | [7] | |
Maximum [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Volatility range of inputs (percentage) | ' | 40.17% | [7] | |
[1] | The fair market value of the asset was determined by using the Company's closing stock price as reflected in the over-the-counter market. | |||
[2] | Monte Carlo inputs are "n/a" on expiration date of February 4, 2013 since only intrinsic value remains. There is no time value left, so the use of an option model is not necessary. | |||
[3] | The term is the contractual remaining term, allocated among twelve equal intervals for purposes of calculating other inputs, such as volatility and risk-free rate. | |||
[4] | The implied expected life, and equivalent volatility and risk-free risk-adjusted interest rate amounts are derived from the MCS. | |||
[5] | CED's bifurcated from debt instruments are expected to contain an element of market interest risk. That is, the risk that market driven interest rates will change during the term of a fixed rate debt instrument. | |||
[6] | The Company utilized a yield approach in developing its credit risk assumption. The yield approach assumes that the investor's yield on the instrument embodies a risk component, generally, equal to the difference between the actual yield and the yield for a similar instrument without regard to risk. | |||
[7] | The Company does not have a market trading history upon which to base its forward-looking volatility. Accordingly, the Company selected peer companies that provided a reasonable basis upon which to calculate volatility for each of the intervals described in (2) above. |
Stockholders_Deficit_Details
Stockholders' Deficit (Details) (USD $) | Sep. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Jul. 30, 2012 |
Series A Preferred Stock [Member] | Reverse Stock Split [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 | 100,000,000 | ' | 12,500,000 |
Series A Preferred stock, shares authorized (shares) | 10,000,000 | ' | ' | 240 | ' |
Series A Preferred stock, par value (per share) | $0.00 | ' | ' | ' | ' |
Stockholders_Deficit_Private_P
Stockholders' Deficit - Private Placement (Details) (USD $) | 1 Months Ended | 9 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||
Sep. 23, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | Sep. 23, 2013 | Aug. 15, 2013 | 31-May-13 | Sep. 23, 2013 | Sep. 23, 2013 | |
Common Stock [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.50 exercise price [Member] | ||||
Class of Warrant or Right [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Share Price | ' | ' | ' | $0.25 | ' | ' | ' | ' |
Class of Warrant or Right, Expiration Period | ' | ' | ' | ' | '5 years | '5 years | '5 years | '5 years |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | 349,464 | ' | ' | ' | 7,118,236 | 7,118,236 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | ' | ' | ' | ' | ' | ' | 0.25 | 0.5 |
Warrants, Fair Value at Issuance | ' | ' | $2,344,899 | ' | ' | ' | ' | ' |
Payments of Stock Issuance Costs | 1,646,874 | ' | ' | ' | ' | ' | ' | ' |
Payments of Stock Issuance Costs, Cash | 150,355 | ' | ' | ' | ' | ' | ' | ' |
Payments of Stock Issuance Costs, Warrants | 2,344,899 | ' | ' | ' | ' | ' | ' | ' |
Income (Loss) in Fair Value of Debt and Exchange of Convertible Notes | 848,380 | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Value, Increase to Common Stock and Additional Paid in Capital | ' | 1,912,244 | ' | ' | ' | ' | ' | ' |
Proceeds from Issuance of Private Placement | 2,182,500 | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, New Issues | ' | ' | ' | 8,730,000 | ' | ' | ' | ' |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | $1,376,618 | ' | ' | ' | ' |
Stock Issued During Period, Shares, Conversion of Convertible Securities | ' | ' | ' | 5,506,472 | ' | ' | ' | ' |
Period After Final Closing Date of Private Placement that Registration Statement Must Be Filed | '4 months | ' | ' | ' | ' | ' | ' | ' |
Period After Final Closing Date of Private Placement that Registration Statement Must Be Made Effective | '6 months | ' | ' | ' | ' | ' | ' | ' |
Stockholders_Deficit_Convertib
Stockholders' Deficit - Convertible Securities (Details) (USD $) | 0 Months Ended | 0 Months Ended | 12 Months Ended | |||
Feb. 04, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Feb. 04, 2013 | Dec. 31, 2012 | Feb. 03, 2012 | |
Senior Secured Promissory Note [Member] | Senior Secured Promissory Note [Member] | Senior Secured Promissory Note [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' |
Debt instrument, face amount (in dollars) | ' | ' | ' | ' | ' | $550,000 |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | 112,150 | 437,850 | ' |
Conversion of notes payable into common stock (shares) | 6,903,872 | ' | ' | 773,983 | 2,069,439 | ' |
Debt instrument, convertible, conversion price (per share) | ' | ' | ' | $0.14 | $0.21 | ' |
Embedded derivative, conversion of notes into common stock | ' | ' | ' | ' | -83,663 | ' |
Compound embedded derivative | $12,461 | $0 | $11,817 | ' | ' | ' |
Stockholders_Deficit_Warrant_T
Stockholders' Deficit - Warrant Transactions (Details) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | ||||
Aug. 15, 2013 | Mar. 01, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | 22-May-13 | Mar. 01, 2013 | Aug. 15, 2013 | 22-May-13 | Aug. 12, 2013 | Sep. 30, 2013 | Aug. 15, 2013 | 31-May-13 | Sep. 23, 2013 | |
Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Secured Line of Credit Facility [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Private Transaction with Warrant Holders [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | Warrants - $0.25 exercise price [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of warrants with preferred stock financing | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,001 | ' | ' | ' |
Loss on exchange of warrants (in dollars) | ' | ' | ($732) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit facility, maximum borrowing capacity | ' | ' | ' | ' | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' |
Warrant issued in financing arrangement, period of maturity (in years) | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant issued not yet exercised | ' | 58,139 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant issued not yet exercised, value | ' | 15,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant issued not yet exercised (per share) | ' | $0.26 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants issued | ' | 7,209 | 7,209 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Short-term loan | ' | ' | ' | ' | ' | ' | ' | 750,000 | 520,000 | ' | ' | ' | ' |
Warrants issued to purchase shares | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' |
Warrants issued to purchase shares, exercise price (per share) | ' | ' | ' | ' | ' | ' | $0.25 | $0.25 | ' | ' | ' | ' | ' |
Warrant conversion period to purchase shares (in years) | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' |
Additional warrants issued to purchase shares (shares) | ' | ' | ' | ' | ' | ' | 3,187,500 | 3,187,500 | ' | ' | ' | ' | ' |
Class of Warrant or Right, Expiration Period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | '5 years | '5 years |
Shares granted in period (shares) | ' | ' | ' | 1,687,500 | 1,687,500 | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, award vesting period (in years) | ' | ' | ' | '2 years | ' | ' | ' | '2 years | ' | ' | ' | ' | ' |
Adjustments to Additional Paid in Capital, Warrant Issued | $706,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockholders_Deficit_Stock_Opt
Stockholders' Deficit - Stock Options (Details) (USD $) | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | 12-May-11 | Sep. 30, 2013 | Aug. 22, 2011 | Aug. 22, 2011 | Dec. 31, 2012 | Aug. 22, 2011 | Aug. 22, 2011 | Aug. 22, 2011 | Aug. 22, 2011 | |
Stock Options [Member] | Stock Options [Member] | Stock Options [Member] | Stock Options [Member] | Equity Incentive 2011 Plan [Member] | Equity Incentive 2011 Plan [Member] | Equity Incentive 2011 Plan [Member] | Equity Incentive 2011 Plan [Member] | Equity Incentive 2011 Plan [Member] | Equity Incentive 2011 Plan [Member] | Equity Incentive B 2011 Plan [Member] | Equity Incentive B 2011 Plan [Member] | May 2011 and August 2011 Equity Incentive Plans [Member] | May 2011 and August 2011 Equity Incentive Plans [Member] | May 2011 and August 2011 Equity Incentive Plans [Member] | Individual Stock Ownership in Excess of 10 Percent [Member] | Twelve Months After Grant Date [Member] | Monthly in equal installments [Member] | |||
Stock Options [Member] | May 2011 and August 2011 Equity Incentive Plans [Member] | May 2011 and August 2011 Equity Incentive Plans [Member] | May 2011 and August 2011 Equity Incentive Plans [Member] | |||||||||||||||||
Stock Options [Member] | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options, shares authorized (shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,613,715 | ' | 87,500 | ' | ' | ' | ' | ' | ' |
Common stock, capital shares reserved for future issuance (shares) | ' | ' | ' | ' | ' | ' | 4,728,955 | ' | 4,728,955 | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' |
Fair market value of incentive stock options (percentage) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | 110.00% | ' | ' |
Share-based compensation arrangement by share-based payment award, equity instruments options, percentage vested (pecentage) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' |
Share-based compensation arrangement by share-based payment award, award vesting period (in years) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years |
Expected term (in years) | ' | ' | ' | ' | ' | ' | '10 years | '5 years | '9 years | '5 years | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' |
Common shares, exercises | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | 551 | ' | ' | ' | ' | 551 | ' | ' | ' | ' |
Proceeds from exercise of stock options | $0 | $1,099 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,099 | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, options, exercises in period, total intrinsic value (shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,769 | ' | ' | ' | ' |
Share-based compensation, requisite service period recognition | ' | ' | 190,877 | 31,894 | 359,251 | 150,878 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonvested awards, total compensation cost not yet recognized | ' | ' | $696,167 | ' | $696,167 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonvested awards, total compensation cost not yet recognized, period for recognition (in years) | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockholders_Deficit_Schedule_
Stockholders' Deficit - Schedule of Stock Option Activity (Details) (Equity Incentive 2011 Plan [Member], USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Equity Incentive 2011 Plan [Member] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ' |
Common shares, outstanding beginning of period | 391,977 | 114,445 | ' |
Common shares, granted | 7,640,062 | 378,293 | ' |
Common shares, exercises | 0 | -551 | ' |
Common shares, forfeited | -1,111,013 | -100,210 | ' |
Common shares, outstanding end of period | 6,921,026 | 391,977 | 114,445 |
Common shares, excercisable | 1,611,198 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Weighted average exercise price, beginning of period | $5.87 | $17.61 | ' |
Weighted average exercise price, granted | $0.25 | $5.74 | ' |
Weighted average exercise price, exercised | $0 | $2 | ' |
Weighted average exercise price, forfeited | $0.45 | $18.81 | ' |
Weighted average exercise price, end of period | $0.54 | $5.87 | $17.61 |
Weighted average exercise price, exercisable | $0.89 | ' | ' |
Weighted average remaining life (years), outstanding | '8 years 9 months | '4 years 4 months | '4 years 5 months |
Weighted average remaining life (years), exercisable | '8 years 10 months | ' | ' |
Stockholders_Deficit_Schedule_1
Stockholders' Deficit - Schedule of nonvested stock option activity (Details) (Equity Incentive 2011 Plan [Member], USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Equity Incentive 2011 Plan [Member] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ' | ' | ' |
Common shares, nonvested beginning of period | 308,627 | 57,516 | ' |
Common shares, granted | 7,640,062 | 378,293 | ' |
Common shares, vested | -1,541,284 | -83,429 | ' |
Common shares, forfeited | -1,097,577 | -43,753 | ' |
Common shares, nonvested end of period | 5,309,828 | 308,627 | 57,516 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ' | ' | ' |
Weighted average grant date fair value, nonvested beginning of period | $2.17 | $2.73 | ' |
Weighted average grant date fair value, granted | $0.20 | $2.17 | ' |
Weighted average grant date fair value, vested | $0.37 | $2.26 | ' |
Weighted average grant date fair value, forfeited | $0.21 | $2.78 | ' |
Weighted average grant date fair value, nonvested end of period | $0.27 | $2.17 | $2.73 |
Weighted average remaining years to vest | '3 years 7 months | '2 years 11 months | '2 years 6 months |
Stockholders_Deficit_Restricte
Stockholders' Deficit - Restricted Stock Issued for Services (Details) (USD $) | 0 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2013 | Jan. 03, 2013 | Jun. 12, 2012 | Sep. 30, 2012 | Aug. 31, 2012 | 31-May-12 | Sep. 30, 2013 | 16-May-13 | Jan. 03, 2013 | Jul. 02, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | 31-May-12 | 31-May-12 | 4-May-12 | Jan. 31, 2013 | Sep. 30, 2013 | Jan. 03, 2013 | Jan. 03, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Immediately following signed agreements [Member] | Each month for 12 months [Member] | Convertible Promissory Note [Member] | Board of Directors Chairman [Member] | Board of Directors Chairman [Member] | Investor Relations Services [Member] | Investor Relations Services [Member] | Selling and Marketing Expense [Member] | Selling and Marketing Expense [Member] | General and Administrative Expense [Member] | General and Administrative Expense [Member] | |||||||
Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | Restricted Stock [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash paid For celebrity endorsements | ' | ' | ' | ' | ' | $100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted shares issued for celebrity endorsements | ' | ' | ' | ' | ' | 135,521 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, equity instruments other than options, percentage vested | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | 6.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued during period, value, restricted stock award, gross | ' | ' | 1,200 | 69,445 | 35,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, face amount (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued during period, shares, issued for services | ' | ' | ' | ' | ' | ' | 823,090 | 30,000 | 20,000 | 71,221 | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' |
Stock issued during period, value, issued for services | ' | ' | ' | ' | ' | ' | ' | 6,000 | ' | 356,103 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, shares issued in period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 60,000 | 60,000 | ' | ' | ' | ' | ' | ' |
Stock issued during period, value, purchase of assets | ' | 4,820 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments for professional services | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,000 | ' | ' | ' | ' | ' |
Shares reserved for future issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' |
Share-based compensation, requisite service period recognition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 289,303 | 384,088 | ' | ' | ' | ' | ' | ' | ' | 1,222 | 14,027 | 288,081 | 370,061 |
Share Price, Restricted Stock Granted for Services, Per Share | ' | ' | ' | ' | ' | ' | $0.35 | ' | ' | ' | $0.35 | $0.35 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Legal Fees Reduction, Settled by Issuance of Restricted Stock | 288,081 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of stock issued during period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 288,081 | 366,301 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in fair value of stock issued during period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $266 | $7,098 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockholders_Deficit_Schedule_2
Stockholders' Deficit - Schedule of Nonvested Restricted Stock Outstanding (Details) (Restricted Stock [Member]) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Restricted Stock [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' | ' |
Nonvested beginning of period | 48,582 | 0 |
Granted | 1,133,090 | 312,387 |
Vested | -1,181,672 | -263,805 |
Forfeited | 0 | 0 |
Nonvested end of period | 0 | 48,582 |
Loss_Per_Common_Share_Details
Loss Per Common Share (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share, amount | 27,350,213 | 1,314,858 | 27,350,213 | 1,314,858 |
Stock Options [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share, amount | 6,921,026 | 393,494 | 6,921,026 | 393,494 |
Warrant [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share, amount | 18,605,999 | 128,434 | 18,605,999 | 128,434 |
Restricted Stock Units (RSUs) [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share, amount | 1,819,400 | ' | 1,819,400 | ' |
Potential conversion of series A convertible preferred [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share, amount | 3,788 | 3,788 | 3,788 | 3,788 |
Potential conversion of promissory note payable [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share, amount | 0 | 789,142 | 0 | 789,142 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | Aug. 12, 2013 | 22-May-13 | Sep. 23, 2013 | Sep. 23, 2013 | Dec. 26, 2012 | Jan. 31, 2013 | Sep. 30, 2013 | Mar. 31, 2013 | Sep. 23, 2013 |
Unsecured Debt [Member] | Unsecured Debt [Member] | President and Chief Executive Officer [Member] | President and Chief Executive Officer [Member] | Board of Directors Chairman [Member] | Board of Directors Chairman [Member] | Board of Directors Chairman [Member] | Board of Directors Chairman [Member] | Common Stock [Member] | |
Stock Options [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | ||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Officers' Compensation | ' | ' | $50,000 | ' | $10,000 | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, shares issued in period | ' | ' | ' | ' | ' | 60,000 | 60,000 | ' | ' |
Common stock, capital shares reserved for future issuance (shares) | ' | ' | ' | ' | ' | ' | ' | 120,000 | ' |
Short-term loan | 520,000 | 750,000 | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, interest rate, stated percentage (percentage) | 7.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, default interest rate (percentage) | 12.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion, converted instrument, amount (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | $1,376,618 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | ' | ' | ' | ' | ' | ' | ' | ' | 5,506,472 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | ' | ' | 4,398,978 | ' | ' | ' | ' | ' | ' |
Weighted average exercise price, granted | ' | ' | $0.25 | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | ' | ' | ' | 'P10Y | ' | ' | ' | ' | ' |