Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2015shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2015 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | CTIG |
Entity Registrant Name | CTI GROUP HOLDINGS INC |
Entity Central Index Key | 355,627 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 0 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 2,914,841 | $ 5,278,476 |
Trade accounts receivable, less allowance for doubtful accounts of $68,668 and $66,706, respectively | 2,917,194 | 3,577,866 |
Prepaid expenses | 395,528 | 368,965 |
Other current assets | 76,333 | 243,861 |
Total current assets | 6,303,896 | 9,469,168 |
Property, equipment, and software, net | 2,330,707 | 2,280,493 |
Intangible assets, net | 110,721 | 470,566 |
Deferred tax asset | 18,222 | |
Goodwill | 2,769,589 | 2,769,589 |
Other assets | 6,274 | 29,218 |
Total assets | 11,539,409 | 15,019,034 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 174,535 | 244,335 |
Accrued expenses | 1,054,532 | 1,227,101 |
Accrued wages and other compensation | 613,181 | 633,761 |
Income tax payable | 437,102 | 635,980 |
Deferred tax liability | 201,478 | 191,731 |
Deferred revenue | 2,753,118 | 4,250,433 |
Notes payable | 44,866 | 57,522 |
Total current liabilities | 5,278,812 | 7,240,863 |
Lease incentive - long term | 167,779 | 241,276 |
Deferred revenue - long term | 177,045 | 799,559 |
Deferred tax liability - long term | 45,721 | |
Note payable - long term | 30,138 | |
Total liabilities | $ 5,623,636 | $ 8,357,557 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Class A common stock, par value $.01 per share; 47,166,666 shares authorized; 29,870,511 and 29,388,937 issued at September 30, 2015 and at December 31, 2014, respectively | $ 298,705 | $ 293,889 |
Additional paid-in capital | 26,478,799 | 26,339,410 |
Accumulated deficit | (21,099,031) | (20,203,616) |
Accumulated other comprehensive income | 429,443 | 423,937 |
Treasury stock, 140,250 shares Class A common stock at September 30, 2015 and December 31, 2014 at cost | (192,143) | (192,143) |
Total stockholders' equity | 5,915,773 | 6,661,477 |
Total liabilities and stockholders' equity | $ 11,539,409 | $ 15,019,034 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts for trade accounts receivable | $ 68,668 | $ 66,706 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 47,166,666 | 47,166,666 |
Common stock, shares issued | 29,870,511 | 29,388,937 |
Treasury stock, shares | 140,250 | 140,250 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Software sales, service fee and license fee revenue | $ 3,491,853 | $ 4,109,715 | $ 11,285,749 | $ 12,139,253 |
Cost and Expenses: | ||||
Cost of products and services, excluding depreciation and amortization | 971,172 | 1,122,567 | 3,079,262 | 3,190,515 |
Selling, general and administration | 1,908,002 | 1,866,798 | 5,713,463 | 5,724,238 |
Research and development | 638,006 | 756,938 | 2,005,488 | 2,448,800 |
Depreciation and amortization | 405,378 | 480,315 | 1,243,420 | 1,408,982 |
Total costs and expenses | 3,922,558 | 4,226,618 | 12,041,633 | 12,772,535 |
Loss from operations | (430,705) | (116,903) | (755,884) | (633,282) |
Other income / (expense) | ||||
Interest income (expense) | 5,079 | (3,779) | 2,076 | (29,252) |
Other (expense) / income | (202) | 1,344,749 | ||
Total other income/ (expense) | 5,079 | (3,779) | 1,874 | 1,315,497 |
Income / (loss) before income taxes | (425,626) | (120,682) | (754,010) | 682,215 |
Tax expense | 79,099 | 85,892 | 141,405 | 198,832 |
Net income / (loss) | (504,725) | (206,574) | (895,415) | 483,383 |
Other comprehensive income / (loss) | ||||
Foreign currency translation adjustment | (44,502) | 51,888 | 5,506 | 44,544 |
Comprehensive income / (loss) | $ (549,227) | $ (154,686) | $ (889,909) | $ 527,927 |
Basic net income / (loss) per common share | $ (0.03) | $ 0.02 | ||
Basic and diluted net loss per common share | $ (0.02) | $ (0.01) | ||
Diluted net income / (loss) per common share | $ (0.03) | $ 0.02 | ||
Basic and diluted weighted average common shares outstanding | 29,729,201 | 29,212,800 | ||
Basic weighted average common shares outstanding | 29,729,201 | 29,212,800 | 29,415,430 | 29,212,284 |
Diluted weighted average common shares outstanding | 29,729,201 | 29,212,800 | 29,415,430 | 31,658,977 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net income / (loss) | $ (895,415) | $ 483,383 |
Adjustments to reconcile net income / (loss) to net cash (used in) / provided by operating activities: | ||
Depreciation and amortization | 1,243,420 | 1,408,982 |
Provision for doubtful accounts | 1,962 | 59,823 |
Deferred income taxes | (13,109) | (80,801) |
Recognition of rent incentive benefit | (23,501) | 285,272 |
Stock compensation expense | 268,152 | 88,108 |
Loss on disposal | 202 | |
Changes in operating assets and liabilities: | ||
Trade receivables | 575,779 | (501,221) |
Prepaid expenses | (29,658) | (329,953) |
Income taxes | (175,301) | (270,742) |
Other assets | 189,197 | 202,711 |
Accounts payable | 18,267 | 119,630 |
Accrued expenses | (451,742) | (57,620) |
Accrued wages and other compensation | (12,995) | 434,461 |
Deferred revenue | (1,993,544) | 5,132,793 |
Cash (used in) / provided by operating activities | (1,298,286) | 6,974,826 |
Cash flows used in investing activities: | ||
Additions to property, equipment, and software | (930,527) | (1,192,969) |
Cash used in investing activities | (930,527) | (1,192,969) |
Cash flows (used in) / provided by financing activities: | ||
Exercise of stock options | 23,497 | 375 |
Payment on note payable | (42,794) | (40,277) |
Payment on note from shareholders | (1,400,000) | |
Cash used in financing activities | (19,297) | (1,439,902) |
Effect of foreign currency exchange rates on cash and cash equivalents | (115,525) | (116,734) |
Increase / (decrease) in cash and cash equivalents | (2,363,635) | 4,225,221 |
Cash and cash equivalents, beginning of period | 5,278,476 | 1,271,514 |
Cash and cash equivalents, end of period | $ 2,914,841 | $ 5,496,735 |
Business and Basis of Presentat
Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | NOTE 1: Business and Basis of Presentation The Company designs, develops, markets and supports billing and data management software and services. The Company operates in two business segments: Electronic Invoice Management (“EIM”) and Call Accounting Management and Recording (“CAMRA”). The majority of the Company’s business is in Europe and North America. The Company was originally incorporated in Pennsylvania in 1968 and reincorporated in the State of Delaware in 1988, pursuant to a merger of CTI into a wholly owned subsidiary formed as a Delaware corporation. In November 1995, the Company changed its name to CTI Group (Holdings) Inc. EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries. CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform. The accompanying consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Certain information in footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), has been condensed or omitted pursuant to the rules and regulations of the SEC, although the Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2014 and the notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC. The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB establishes GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants, which the Company is required to follow. Amortization expense of developed software, which relates to cost of sales, was presented as depreciation and amortization expense. Amortization expense of developed software amounted to $700,829 and $598,518 for the nine months ended September 30, 2015 and 2014, respectively. Amortization expense of developed software amounted to $222,061 and $220,786 for the three months ended September 30, 2015 and 2014, respectively. |
Supplemental Schedule of Non-Ca
Supplemental Schedule of Non-Cash Investing and Financing Activities | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Schedule of Non-Cash Investing and Financing Activities | NOTE 2: Supplemental Schedule of Non-Cash Investing and Financing Activities The Company paid $81,384 and $41,415 for current year income tax estimates for the three months ended September 30, 2015 and 2014, respectively, for taxable income in the United Kingdom. The Company paid income taxes of approximately $305,911 and $498,200 during the nine months ended September 30, 2015 and 2014, respectively, for taxes on prior year income in the United Kingdom. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 3: Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, notes payable, and other accruals approximate their fair values because of their nature and expected duration. |
Debt Obligations and Liquidity
Debt Obligations and Liquidity | 9 Months Ended |
Sep. 30, 2015 | |
Text Block [Abstract] | |
Debt Obligations and Liquidity | NOTE 4: Debt Obligations and Liquidity In October 2013, in order to supplement the Company’s liquidity, Fairford Holdings Limited (“Fairford”), Michael Reinarts and John Birbeck (collectively, Fairford and Messrs. Reinarts and Birbeck, the “Lenders”) agreed to advance to the Company up to $1,400,000. In connection with the advancement, the Company issued to the Lenders a promissory note, with the amount advanced bearing interest at 6.5% per annum. On April 17, 2014, the Company repaid in full the promissory note. The Company believes that the primary sources of liquidity over the next twelve months will be cash on hand and cash from operations. If the Company is unable to generate adequate cash from operations, the Company may seek funds from Fairford, any one of the other lenders or Enghouse (as defined below). |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | NOTE 5: New Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers: Topic In August 2014, FASB issued ASU 2014-15, “ Presentation of Financial Statements Going Concern Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ” substantial doubt, |
Basic and Diluted Net Income Pe
Basic and Diluted Net Income Per Common Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Income Per Common Share | NOTE 6: Basic and Diluted Net Income Per Common Share Basic earnings per share amounts are computed by dividing reported earnings available to common stockholders by the weighted average shares outstanding for the period. Diluted earnings per share amounts are computed by dividing reported earnings available to common stockholders by weighted average common shares outstanding for the period giving effect to securities considered to be potentially dilutive common shares, such as stock options. For the Three Months Ended For the Nine months ended 2015 2014 2015 2014 Net income / (loss) $ (504,725 ) $ (206,574 ) $ (895,415 ) $ 483,383 Weighted average shares of common stock outstanding used to compute basic earnings per share 29,729,201 29,212,800 29,415,430 29,212,284 Additional common shares to be issued assuming exercise of stock options and stock warrants — — — 2,446,693 Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share 29,729,201 29,212,800 29,415,430 31,658,977 Basic: Net income / (loss) per share $ (0.02 ) $ (0.01 ) $ (0.03 ) $ 0.02 Weighted average common shares outstanding 29,729,201 29,212,800 29,415,430 29,212,284 Diluted: Net income / (loss) per share $ (0.02 ) $ (0.01 ) $ (0.03 ) $ 0.02 Weighted average common and common equivalent shares outstanding 29,729,201 29,212,800 29,415,430 31,658,977 For the three months ended September 30, 2015 and 2014 and the nine months ended September 30, 2015, outstanding stock options were excluded from weighted average shares of common and common equivalent shares outstanding due to their anti-dilutive effect as a result of the Company’s net loss. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Note 7: Stock Based Compensation The Company’s Amended and Restated Stock Option and Restricted Stock Plan (the “Plan”) provided for the issuance of incentive and nonqualified stock options to purchase, and restricted stock grants of, shares of the Company’s Class A common stock. Individuals eligible for participation in the Plan included designated officers and other employees (including employees who also serve as directors), non-employee directors, independent contractors and consultants who perform services for the Company. The terms of each grant under the Plan were determined by the board of directors of the Company (the “Board”), or a committee of the board administering the Plan, in accordance with the terms of the Plan. Outstanding stock options become immediately exercisable upon a change of control of the Company as in accordance with the terms of the Plan. Stock options granted under the Plan typically become exercisable over a one to five year period. Generally, the options have various vesting periods, which include immediate and term vesting periods. In 2002, the Company’s stockholders authorized an additional 2,000,000 shares available for grant under the Plan. In addition, the Company filed a registration statement on Form S-8 with the SEC. Such registration statement also covered certain options granted prior to the merger in 2001, which were not granted under the Plan (“Outside Plan Stock Options”). On December 8, 2005, the Company’s stockholders ratified the CTI Group (Holdings) Inc. Stock Incentive Plan (the “Stock Incentive Plan”) at the Company’s 2005 Annual Meeting of Stockholders. In addition, the Company filed a registration statement on Form S-8 with the SEC. The Stock Incentive Plan replaced the Plan. No new grants will be granted under the Plan. Grants that were made under the Plan prior to the stockholders’ approval of the Stock Incentive Plan will continue to be administered under the Plan. The Stock Incentive Plan is administered by the Compensation Committee of the Board, (the “Compensation Committee”). Under the Stock Incentive Plan, the Compensation Committee is authorized to grant awards to non-employee directors, executive officers and other employees of, and consultants and advisors to, the Company or any of its subsidiaries and to determine the number and types of such awards and the terms, conditions, vesting and other limitations applicable to each such award. In addition, the Compensation Committee has the power to interpret the Stock Incentive Plan and to adopt such rules and regulations as it considers necessary or appropriate for purposes of administering the Stock Incentive Plan. The following types of awards or any combination of awards may be granted under the Stock Incentive Plan: (i) incentive stock options, (ii) non-qualified stock options, (iii) stock grants, (iv) performance awards, and (v) restricted stock units. The maximum number of shares of Class A common stock with respect to which awards may be granted to any individual participant under the Stock Incentive Plan during each of the Company’s fiscal years will not exceed 1,500,000 shares of Class A common stock, subject to certain adjustments described in the Stock Incentive Plan. The aggregate number of shares of Class A common stock that are reserved for awards, including shares of Class A common stock underlying stock options, to be granted under the Stock Incentive Plan is 6,000,000 shares, subject to adjustments for stock splits, recapitalizations and other specified events. As of September 30, 2015, there were 5,504,475 awards available for grant under the Stock Incentive Plan. If any outstanding award is cancelled, forfeited, or surrendered to the Company, shares of Class A common stock allocable to such award may again be available for awards under the Stock Incentive Plan. Incentive stock options may be granted only to participants who are executive officers and other employees of the Company or any of its subsidiaries on the day of the grant, and non-qualified stock options may be granted to any participant in the Stock Incentive Plan. No stock option granted under the Stock Incentive Plan will be exercisable later than ten years after the date it is granted. On April 1, 2014, “Board”, adopted Amendment No. 1 (the “Amendment”) to the CTI Group (Holdings) Inc. Stock Incentive Plan. The Amendment amended the Stock Incentive Plan to, among other things, permit the Compensation Committee of the Board, as administrator of the Stock Incentive Plan, to issue restricted stock units (each an “RSU”) to certain eligible participants under the Stock Incentive Plan. An RSU represents a contingent right to receive shares of Class A common stock, cash and/or other property. Pursuant to the Amendment, the Compensation Committee of the Board may, in its sole discretion, determine (i) the participants, under the Stock Incentive Plan, who will receive RSUs, and (ii) the number of shares of the Company’s Class A common stock and/or the amount of cash or other property underlying each RSU. Further, each RSU will be subject to such terms and conditions consistent with the Stock Incentive Plan as are determined by the Compensation Committee of the Board and as set forth in the award agreement relating to such RSU. The Amendment also amended the Stock Incentive Plan to permit the Compensation Committee of the Board to grant awards under the Stock Incentive Plan in substitution for stock and stock-based awards of another entity (an “Acquired Entity”) held by such Acquired Entity’s former employees if such individuals become employees of the Company as a result of the Company’s merger or consolidation with or acquisition of the Acquired Entity. On April 1, 2015, the Board adopted the CTI Group (Holdings) Inc. 2015 Stock Incentive Plan (the “2015 Stock Incentive Plan”). The 2015 Stock Incentive Plan is administered by the Compensation Committee of the Board. Under the 2015 Stock Incentive Plan, the Compensation Committee is authorized to grant awards to non-employee directors, executive officers and other employees of, and consultants and advisors to, the Company or any of its subsidiaries and to determine the number and types of such awards and the terms, conditions, vesting and other limitations applicable to each such award. In addition, the Compensation Committee has the power to interpret the 2015 Stock Incentive Plan and to adopt such rules and regulations as it considers necessary or appropriate for purposes of administering the 2015 Stock Incentive Plan. The following types of awards or any combination of awards may be granted under the 2015 Stock Incentive Plan: (i) incentive stock options, (ii) non-qualified stock options, (iii) stock grants, (iv) performance awards, and (v) RSUs. The maximum number of shares of Class A common stock with respect to which awards may be granted to any individual participant under the 2015 Stock Incentive Plan during each of the Company’s fiscal years will not exceed 1,500,000 shares of Class A common stock, subject to certain adjustments described in the 2015 Stock Incentive Plan. The aggregate number of shares of Class A common stock that are reserved for awards, including shares of Class A common stock underlying stock options, to be granted under the 2015 Stock Incentive Plan is 5,000,000 shares, subject to adjustments for stock splits, recapitalizations and other specified events. If any outstanding award is cancelled, forfeited, settled in cash or surrendered to the Company, shares of Class A common stock allocable to such award may again be available for awards under the 2015 Stock Incentive Plan. Incentive stock options may be granted only to participants who are executive officers and other employees of the Company or any of its subsidiaries on the day of the grant, and non-qualified stock options may be granted to any participant in the 2015 Stock Incentive Plan. No stock option granted under the 2015 Stock Incentive Plan will be exercisable later than ten years after the date it is granted. The Compensation Committee of the Board, as administrator of the 2015 Stock Incentive Plan, is permitted to issue RSUs to certain eligible participants under the 2015 Stock Incentive Plan. The Compensation Committee of the Board may, in its sole discretion, determine (i) the participants under the 2015 Stock Incentive Plan who will receive RSUs, and (ii) the number of shares of the Company’s Class A common stock and/or the amount of cash or other property underlying each RSU. Further, each RSU will be subject to such terms and conditions consistent with the 2015 Stock Incentive Plan as are determined by the Compensation Committee of the Board and as set forth in the award agreement relating to such RSU. The Compensation Committee of the Board is also permitted to grant awards under the 2015 Stock Incentive Plan in substitution for stock and stock-based awards of an Acquired Entity held by such Acquired Entity’s former employees if such individuals become employees of the Company as a result of the Company’s merger or consolidation with or acquisition of the Acquired Entity. Through March 31, 2015, the Company treated all RSUs as equity awards as it was the Company’s intent to redeem these awards via transfer of stock. On April 20, 2015, the Board of Directors consented to allow RSUs that had vested at April 1, 2015 to be redeemed for their cash or stock value. As a result of this decision, the remaining RSUs outstanding were deemed tainted, and were modified to be treated as liability awards. The Company now records a liability for restrictive stock units and re-measures the liability on each reporting date and the associated compensation cost is adjusted to reflect the re-measurement of the fair value at the reporting date. There were 172,805 shares exercised and 308,869 RSU’s vested for the nine months ended September 30, 2015. In addition, there were 85,243 shares or $44,584 redeemed for cash and accounted for as a reduction in stockholders equity. The stock compensation expense for the nine month period ended September 30, 2015 was $268,152. As of September 30, 2015, no awards had been issued under the 2015 Stock Incentive Plan. At September 30, 2015, there were options to purchase 2,960,921 shares of Class A common stock. There were exercisable options to purchase an aggregate of 2,960,921 shares of Class A common stock under the Plan, Stock Incentive Plan and 2015 Stock Incentive Plan as of September 30, 2015. At September 30, 2015, there were RSUs outstanding representing the right, subject to satisfaction of vesting conditions, to receive an aggregate of 3,098,614 shares of Class A common stock (or their value in cash) at a future date without payment of a purchase price. Information with respect to options was as follows: Options & Exercise Price Range Per Share Weighted Outstanding, January 1, 2015 5,811,746 $ 0.00 - $ 0.40 $ 0.21 Granted 2,519,507 $ 0.00 – $ 0.52 $ 0.351 Exercised (481,574 ) $ 0.09 - $ 0.52 $ 0.382 Expired (1,790,144 ) $ 0.00 – $ 0.52 $ 0.373 Outstanding, September 30, 2015 6,059,535 $ 0.00 - $0.52 $ 0.206 The future compensation costs related to non-vested options at September 30, 2015 is $283,235. The Company records a liability for restrictive stock units (RSU’s) and re-measures the liability on each reporting date and the associated compensation cost is adjusted to reflect the re-measurement of the fair value at the reporting date. The future compensation cost of the RSU’s valued at September 30, 2015 will be $728,458. The future costs will be recognized over the weighted average period of approximately 2.50 years The following table summarizes options exercisable at September 30, 2015: Option Exercise Price Weighted Average Aggregate Weighted Remaining September 30, 2015 2,960,921 $ 0.08 – $ 0.52 $ 0.226 $ 304,334 3.50 years The following table summarized non vested options and RSU’s: Option/RSU Shares Unvested outstanding, January 1, 2015 1,376,832 Granted 2,519,507 Expired (260,623 ) Vested (537,102 ) Unvested outstanding, September 30, 2015 3,098,614 The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula) that uses the assumptions noted in the following table: 2014 2015 Risk-free interest rate 0.50 % 1.00 % Dividend yield 0.00 % 0.00 % Volatility factor 91.00 % 85.00 % Expected lives 5 years 5 years RSU’s value is the value of the Company’s stock on the reporting date and expense is recognized on a straight line basis taking into account an estimated forfeiture. For the three and nine months ended September 30, 2015 and the three months ended September 30, 2014, outstanding stock options were excluded from weighted average shares of common and common equivalent shares outstanding due to their anti-dilutive effect as a result of the Company’s net loss. The fair value of each option and RSU award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula). Expected volatilities are based on implied volatilities from historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from general practices used by other companies in the software industry and estimates by the Company of the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. On February 16, 2007, the Company and Fairford Holdings Europe AB, formerly known as Fairford Holdings Scandinavia AB (“Fairford Europe”), a wholly-owned subsidiary of Fairford, entered into the Securities Purchase Agreement (the “Agreement”), dated February 16, 2007. Pursuant to the Agreement, on February 16, 2007, the Company issued to Fairford Europe a Class A common stock Purchase Warrant (the “Original Warrant”) to purchase shares of Class A common stock of the Company in consideration for securing the issuance of a $2.6 million letter of credit (the “Letter of Credit”) from SEB Bank to National City Bank. Due to National City Bank’s receipt of the Letter of Credit, the Company was able to obtain the loan at a favorable cash-backed interest rate. Effective April 14, 2008, the Company entered into a new Securities Purchase Agreement with Fairford Europe and issued an additional warrant to Fairford Europe purchase shares of Class A common stock based on the interest rate savings (the “Additional Warrant”). Pursuant to the Original Warrant, Fairford Europe is entitled to purchase 419,495 shares of Class A common stock at the exercise price of $0.34 per share, subject to adjustments as described in the Original Warrant, at any time prior to the 10th anniversary of the date of issuance. Pursuant to the Additional Warrant, Fairford Europe is entitled to purchase 620,675 shares of Class A common stock at the exercise price of $0.22 per share, subject to adjustments as described in the Additional Warrant, at any time prior to the 10th anniversary of the date of issuance. On December 31, 2009, Fairford Europe sold all of its owned Class A shares, or 355,099 shares to Fairford for SEK 2.80362 $(0.39) per share. As of September 30, 2015, Fairford beneficially owned 62.0% of the Company’s outstanding Class A common stock and Fairford Europe owned warrants to purchase 1,040,170 shares of the Company’s Class A common stock. Mr. Osseiran, the majority holder of the Company’s Class A common stock and a director of the Company, is a director of Fairford, the President of Fairford Europe and a grantor and sole beneficiary of a revocable trust which is the sole stockholder of Fairford. Mr. Dahl, a director of the Company, is a director of Fairford and the Chairman of Fairford Europe. The Original Warrant and Additional Warrant vested immediately upon grant. Selling, general and administrative expense includes stock based compensation of $135,052 and $8,142 for the three months ended September 30, 2015 and September 30, 2014, respectively. Selling, general and administrative expense includes stock based compensation of $268,152 and $88,108, for the nine months ended September 30, 2015 and September 30, 2014, respectively. Stock-based compensation expenses are recorded in the Corporate Allocation segment as these amounts are not included in internal measures of segment operating performance. |
Indemnification to Customers
Indemnification to Customers | 9 Months Ended |
Sep. 30, 2015 | |
Text Block [Abstract] | |
Indemnification to Customers | NOTE 8: Indemnification to Customers The Company’s agreements with customers generally require the Company to indemnify the customer against claims that the Company’s software infringes third party patent, copyright, trademark or other proprietary rights. Such indemnification obligations are generally limited in a variety of industry-standard provisions including our right to replace the infringing product. As of September 30, 2015, the Company did not experience any material losses related to these indemnification obligations and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, the Company has not established any related accruals. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | NOTE 9: Contingencies The Company is subject to claims and lawsuits arising primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of any such pending claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company. The Company realized other income of $0 and $1,344,749 for the three and nine months ended September 30, 2014, respectively. The other income of $1,344,749 was the net amount of a $3,100,000 patent settlement less legal fees related to the settlement of $1,755,251.The Company did not have any corresponding settlement in the period ended September 30, 2015. On June 1, 2015, the Company entered into an Employment Agreement (the “Employment Agreement”) with Manfred Hanuschek, which amended and restated a prior agreement with Mr. Hanuschek. The terms of the Employment Agreement include, but are not limited to, compensation, non-competition, severance and change in control clauses. As of September 30, 2015 all relevant amounts have been accrued for under the Employment Agreement. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10: Income Taxes The Company records a valuation allowance against its net deferred tax asset to the extent management believes, it is more likely than not, that the asset will not be realized. As of September 30, 2015, the Company’s valuation allowance related only to net deferred tax assets in the United States. The Company does not expect earnings related to non-U.S. subsidiaries to be permanently reinvested. The impact of adoption of this policy has not had a material impact on the Company’s results of operations, financial position or cash flows. The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. As of September 30, 2015 and September 30, 2014, the Company had $160,818 and $156,502 of unrecognized tax benefits, respectively, all of which would favorably affect the Company’s effective tax rate if recognized. The Company and its subsidiaries are subject to U.S. federal and state income taxes as well as foreign income tax in the United Kingdom. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months. The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company had no amounts accrued for interest and penalties as of September 30, 2015. For the nine months ended September 30, 2015 and September 30, 2014, the Company had $141,405 and $198,832, of income tax expense, respectively. For the three months ended September 30, 2015 and September 30, 2014, the Company had $79,099 and $85,892 of income tax expense, respectively. The difference between the statutory rate and the actual rate is primarily due to the valuation allowance related to the net deferred tax assets in the United States. The lower actual rate in the United Kingdom for the three months ended September 30, 2015 is a result of increased capital allowances and research and development credits that are permanent differences. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 11: Segment Information The Company has two reportable segments: EIM and CAMRA. These segments are managed separately because the services provided by each segment require different technology and marketing strategies. Electronic Invoice Management: Call Accounting Management and Recording: Reconciling items for operating income (loss) in the table below represent corporate expenses, legal costs for patent enforcement and depreciation all of which are in the United States. The accounting policies for segment reporting are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Summarized financial information concerning the Company’s reportable segments for the nine and three months ended September 30, 2015 and 2014 is shown in the following tables. For Nine Months Ended September 30, 2015 Electronic Call Accounting Corporate Consolidated Revenues $ 6,261,627 $ 5,024,122 $ — $ 11,285,749 Gross profit Revenues less cost of products, excluding depreciation and amortization 5,064,863 3,141,624 — 8,206,487 Depreciation and amortization 716,444 514,530 12,446 1,243,420 Income (loss) from operations 841,038 (421,656 ) (1,175,266 ) (755,884 ) Long-lived assets 3,607,637 1,548,149 79,727 5,235,513 For Nine Months Ended September 30, 2014 Electronic Call Accounting Corporate Consolidated Revenues $ 7,034,084 $ 5,105,169 $ — $ 12,139,253 Gross profit Revenues less cost of products, excluding depreciation and amortization 5,722,445 3,226,293 — 8,948,738 Depreciation and amortization 956,318 444,497 8,167 1,408,982 Income (loss) from operations 572,367 (46,309 ) (1,159,340 ) (633,282 ) Long-lived assets 4,394,319 1,405,581 88,032 5,887,932 For Three Months Ended September 30, 2015 Electronic Call Accounting Corporate Consolidated Revenues $ 2,026,935 $ 1,464,918 $ — $ 3,491,853 Gross profit Revenues less cost of products, excluding depreciation and amortization 1,655,405 865,276 — 2,520,681 Depreciation and amortization 238,755 162,363 4,260 405,378 Income (loss) from operations 69,297 (274,874 ) (225,128 ) (430,705 ) Long-lived assets 3,607,637 1,548,149 79,727 5,235,513 For Three Months Ended September 30, 2014 Electronic Call Accounting Corporate Consolidated Revenues $ 2,199,560 $ 1,910,155 $ — $ 4,109,715 Gross profit Revenues less cost of products, excluding depreciation and amortization 1,749,148 1,238,000 — 2,987,148 Depreciation and amortization 312,489 164,789 3,037 480,315 Income (loss) from operations (10,895 ) 160,931 (266,849 ) (116,903 ) Long-lived assets 4,394,319 1,405,581 88,032 5,887,932 The following table presents summarized financial information by geographic location. For Nine Months Ended September 30, 2015 United United Consolidated Revenues $ 2,648,688 $ 8,637,061 $ 11,285,749 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 1,540,853 6,665,634 8,206,487 Depreciation and amortization 506,121 737,299 1,243,420 Income (loss) from operations (1,400,490 ) 644,606 (755,884 ) Long-lived assets 4,485,333 750,180 5,235,513 For Nine Months Ended September 30, 2014 United United Consolidated Revenues $ 3,121,197 $ 9,018,056 $ 12,139,253 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 2,101,967 6,846,771 8,948,738 Depreciation and amortization 433,720 975,262 1,408,982 Income (loss) from operations (1,435,596 ) 802,314 (633,282 ) Long-lived assets 4,865,994 1,021,938 5,887,932 For Three Months Ended September 30, 2015 United United Consolidated Revenues $ 685,146 $ 2,806,707 $ 3,491,853 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 333,938 2,186,743 2,520,681 Depreciation and amortization 160,061 245,317 405,378 Income (loss) from operations (704,872 ) 274,167 (430,705 ) Long-lived assets 4,485,333 750,180 5,235,513 For Three Months Ended September 30, 2014 United United Consolidated Revenues $ 954,013 $ 3,155,702 $ 4,109,715 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 571,124 2,416,024 2,987,148 Depreciation and amortization 161,948 318,367 480,315 Income (loss) from operations (472,491 ) 355,588 (116,903 ) Long-lived assets 4,865,994 1,021,938 5,887,932 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 – Related Party Transactions On October 30, 2013, the Company, issued to Fairford, Michael Reinarts and John Birbeck (collectively, the “Lenders”) a Promissory Note (the “Note”) in the aggregate principal amount of $1,400,000 (the “Principal Amount”). As of September 30, 2015, Fairford beneficially owned 62.0% of the Company’s outstanding Class A common stock. Pursuant to the Note, the Company promised to pay to the Lenders, on demand made at any time following April 30, 2014, or if demand is not sooner made, on May 31, 2014 (such date, or if earlier, the date demand is made under the Note, the “Maturity Date”), the unpaid balance under the Note plus all interest accrued thereunder as of the Maturity Date in the following proportions: 80% to Fairford Holdings, Ltd., 10% to Michael Reinarts and 10% to John Birbeck. Advances as of December 31, 2013, totaled $1,400,000 under the Note. In February 2014, the Company paid the Lenders principal of $700,000 and all interest accrued to date. On April 17, 2014, the Company paid all remaining principal and accrued interest under the Note. On March 7, 2013, a proposal was made by Fairford, Michael Reinarts and John Birbeck (the “Buying Group”), to purchase all of the outstanding shares of stock of the Company for a cash purchase price of $0.29 per share (the “Proposal”). On December 30, 2013, the purchase price on the offer was increased to $0.40 per share (the “Revised Offer”). On September 14, 2014, the Special Committee of the Board rejected the Revised Offer. Upon being informed of the Special Committee’s rejection of the Revised Offer, the Buying Group informed the Company on September 14, 2014 that it would not be increasing and formally withdrew the Revised Offer. Accordingly, the Board disbanded the Special Committee effective immediately. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Event | NOTE 13 – Subsequent Event Agreement and Plan of Merger On October 18, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Enghouse Systems Limited, an Ontario corporation (“Enghouse”), and New Acquisitions Corporation, a Delaware corporation and a wholly owned subsidiary of Enghouse (“Merger Sub”). Pursuant to the Merger Agreement, upon the terms and subject to the terms thereof: • Merger Sub has agreed to commence a tender offer (the “Offer”), subject to certain conditions, no later than November 6, 2015, to purchase all the outstanding shares of the Company’s Class A common stock, par value $0.01 per share (“Shares”), at a cash purchase price of $0.61 per Share (the “Offer Price”); and • as soon as practicable after the consummation of the Offer and satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger” and together with the Offer, the “Transactions”), and the Company will become a direct or indirect wholly owned subsidiary of Enghouse. In the Merger, each Share remaining outstanding following the consummation of the Offer, other than Shares held by the Company or Enghouse or their respective subsidiaries (including, with respect to Enghouse, Merger Sub), or by stockholders of the Company who have properly exercised their appraisal rights in accordance with Section 262 of the Delaware General Corporation Law, as amended (the “DGCL”), will be converted into the right to receive, cash in an amount equal to the Offer Price. The consummation of the Offer is subject to several closing conditions, including (i) that 67% of the issued and outstanding Shares be validly tendered and not withdrawn prior to the expiration of the Offer (the “Minimum Condition”), and (ii) certain other customary closing conditions. The Transactions are not subject to any financing condition. Pursuant to the terms of the Merger Agreement, the Company has granted Merger Sub an option (the “Top-Up Option”) to purchase from the Company, at a price per Share equal to the Offer Price, the number of newly issued Shares (the “Top-Up Shares”) equal to the lowest number of Shares that, when added to the number of Shares directly or indirectly owned by Enghosue and Merger Sub at the time of such exercise, constitutes one Share more than 90% of the outstanding Shares on a fully diluted basis. Merger Sub may only exercise the Top-Up Option, in whole and not in part, at such time when the Minimum Condition is satisfied. Additionally, the number of Top-Up Shares cannot exceed the Shares authorized and unissued or held by the Company in the treasury at the time of the exercise of the Top-Up Option (giving effect to Shares reserved for issuance under any securities convertible into Shares as if such Shares were outstanding). The Company has agreed to customary covenants governing the conduct of its business, including the operation of its business in the ordinary course until the date the Shares are accepted by Merger Sub. The Company has agreed not to solicit or initiate discussions with third parties regarding other proposals to acquire the Company and to certain restrictions on its ability to respond to any such proposal, subject to fulfillment of certain fiduciary requirements of the Board. The Merger Agreement also includes customary termination provisions for both the Company and Enghouse and provides that, in connection with the termination of the Merger Agreement under specified circumstances, the Company will be required to pay Enghouse a termination fee of $800,000. The Merger Agreement provides that each stock option to purchase Shares (“Stock Options”) and each warrant to purchase shares (“Warrants”) that is outstanding immediately prior to the effective time of the Merger, (the “Effective Time”), whether or not then vested or exercisable, automatically will be cancelled by virtue of the Merger. In consideration for the cancellation of such Stock Options and Warrants and in settlement therefor, the Merger Agreement provides that each holder of such Stock Options and Warrants will be entitled to receive an amount in cash (without interest and subject to any applicable withholding of taxes required by applicable law in accordance with the Merger Agreement) equal to (i) the excess, if any, of (a) the Merger consideration per Share over (b) the exercise price per Share previously subject to such Stock Option or Warrant, as applicable, multiplied by (ii) the total number of Shares previously subject to such Stock Options or Warrants, as applicable. The Merger Agreement also provides that each RSU that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, automatically will be cancelled by virtue of the Merger. In consideration of the cancellation of such RSUs and in settlement therefor, the Merger Agreement provides that each holder of such RSUs will be entitled to receive an amount in cash (without interest and subject to any applicable withholding of taxes required by applicable law in accordance with the Merger Agreement) equal to the product of (x) the aggregate number of Shares previously subject to such RSU multiplied by (y) the Merger consideration per Share. Payment of the consideration described in this paragraph will be payable to the holders of cancelled Stock Options, Warrants and RSUs, as applicable, no later than twenty-five calendar days thereafter. |
Business and Basis of Present19
Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Business | The Company designs, develops, markets and supports billing and data management software and services. The Company operates in two business segments: Electronic Invoice Management (“EIM”) and Call Accounting Management and Recording (“CAMRA”). The majority of the Company’s business is in Europe and North America. The Company was originally incorporated in Pennsylvania in 1968 and reincorporated in the State of Delaware in 1988, pursuant to a merger of CTI into a wholly owned subsidiary formed as a Delaware corporation. In November 1995, the Company changed its name to CTI Group (Holdings) Inc. EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries. CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform. |
Basis of Presentation | The accompanying consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Certain information in footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), has been condensed or omitted pursuant to the rules and regulations of the SEC, although the Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2014 and the notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC. The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB establishes GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants, which the Company is required to follow. |
New Accounting Pronouncements | In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers: Topic In August 2014, FASB issued ASU 2014-15, “ Presentation of Financial Statements Going Concern Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ” substantial doubt, |
Basic and Diluted Net Income 20
Basic and Diluted Net Income Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Earnings (Loss) per Share | Diluted earnings per share amounts are computed by dividing reported earnings available to common stockholders by weighted average common shares outstanding for the period giving effect to securities considered to be potentially dilutive common shares, such as stock options. For the Three Months Ended For the Nine months ended 2015 2014 2015 2014 Net income / (loss) $ (504,725 ) $ (206,574 ) $ (895,415 ) $ 483,383 Weighted average shares of common stock outstanding used to compute basic earnings per share 29,729,201 29,212,800 29,415,430 29,212,284 Additional common shares to be issued assuming exercise of stock options and stock warrants — — — 2,446,693 Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share 29,729,201 29,212,800 29,415,430 31,658,977 Basic: Net income / (loss) per share $ (0.02 ) $ (0.01 ) $ (0.03 ) $ 0.02 Weighted average common shares outstanding 29,729,201 29,212,800 29,415,430 29,212,284 Diluted: Net income / (loss) per share $ (0.02 ) $ (0.01 ) $ (0.03 ) $ 0.02 Weighted average common and common equivalent shares outstanding 29,729,201 29,212,800 29,415,430 31,658,977 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Information with Respect to Options | Information with respect to options was as follows: Options & Exercise Price Range Per Share Weighted Outstanding, January 1, 2015 5,811,746 $ 0.00 - $ 0.40 $ 0.21 Granted 2,519,507 $ 0.00 – $ 0.52 $ 0.351 Exercised (481,574 ) $ 0.09 - $ 0.52 $ 0.382 Expired (1,790,144 ) $ 0.00 – $ 0.52 $ 0.373 Outstanding, September 30, 2015 6,059,535 $ 0.00 - $0.52 $ 0.206 |
Summary of Options Exercisable | The following table summarizes options exercisable at September 30, 2015: Option Exercise Price Weighted Average Aggregate Weighted Remaining September 30, 2015 2,960,921 $ 0.08 – $ 0.52 $ 0.226 $ 304,334 3.50 years |
Summary of Non-Vested Options and RSU's | The following table summarized non vested options and RSU’s: Option/RSU Shares Unvested outstanding, January 1, 2015 1,376,832 Granted 2,519,507 Expired (260,623 ) Vested (537,102 ) Unvested outstanding, September 30, 2015 3,098,614 |
Option Valuation Model Assumptions | The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula) that uses the assumptions noted in the following table: 2014 2015 Risk-free interest rate 0.50 % 1.00 % Dividend yield 0.00 % 0.00 % Volatility factor 91.00 % 85.00 % Expected lives 5 years 5 years |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Financial Information Summarizing Reportable Segments | Summarized financial information concerning the Company’s reportable segments for the nine and three months ended September 30, 2015 and 2014 is shown in the following tables. For Nine Months Ended September 30, 2015 Electronic Call Accounting Corporate Consolidated Revenues $ 6,261,627 $ 5,024,122 $ — $ 11,285,749 Gross profit Revenues less cost of products, excluding depreciation and amortization 5,064,863 3,141,624 — 8,206,487 Depreciation and amortization 716,444 514,530 12,446 1,243,420 Income (loss) from operations 841,038 (421,656 ) (1,175,266 ) (755,884 ) Long-lived assets 3,607,637 1,548,149 79,727 5,235,513 For Nine Months Ended September 30, 2014 Electronic Call Accounting Corporate Consolidated Revenues $ 7,034,084 $ 5,105,169 $ — $ 12,139,253 Gross profit Revenues less cost of products, excluding depreciation and amortization 5,722,445 3,226,293 — 8,948,738 Depreciation and amortization 956,318 444,497 8,167 1,408,982 Income (loss) from operations 572,367 (46,309 ) (1,159,340 ) (633,282 ) Long-lived assets 4,394,319 1,405,581 88,032 5,887,932 For Three Months Ended September 30, 2015 Electronic Call Accounting Corporate Consolidated Revenues $ 2,026,935 $ 1,464,918 $ — $ 3,491,853 Gross profit Revenues less cost of products, excluding depreciation and amortization 1,655,405 865,276 — 2,520,681 Depreciation and amortization 238,755 162,363 4,260 405,378 Income (loss) from operations 69,297 (274,874 ) (225,128 ) (430,705 ) Long-lived assets 3,607,637 1,548,149 79,727 5,235,513 For Three Months Ended September 30, 2014 Electronic Call Accounting Corporate Consolidated Revenues $ 2,199,560 $ 1,910,155 $ — $ 4,109,715 Gross profit Revenues less cost of products, excluding depreciation and amortization 1,749,148 1,238,000 — 2,987,148 Depreciation and amortization 312,489 164,789 3,037 480,315 Income (loss) from operations (10,895 ) 160,931 (266,849 ) (116,903 ) Long-lived assets 4,394,319 1,405,581 88,032 5,887,932 |
Summary of Financial Information by Geographic Location | The following table presents summarized financial information by geographic location. For Nine Months Ended September 30, 2015 United United Consolidated Revenues $ 2,648,688 $ 8,637,061 $ 11,285,749 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 1,540,853 6,665,634 8,206,487 Depreciation and amortization 506,121 737,299 1,243,420 Income (loss) from operations (1,400,490 ) 644,606 (755,884 ) Long-lived assets 4,485,333 750,180 5,235,513 For Nine Months Ended September 30, 2014 United United Consolidated Revenues $ 3,121,197 $ 9,018,056 $ 12,139,253 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 2,101,967 6,846,771 8,948,738 Depreciation and amortization 433,720 975,262 1,408,982 Income (loss) from operations (1,435,596 ) 802,314 (633,282 ) Long-lived assets 4,865,994 1,021,938 5,887,932 For Three Months Ended September 30, 2015 United United Consolidated Revenues $ 685,146 $ 2,806,707 $ 3,491,853 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 333,938 2,186,743 2,520,681 Depreciation and amortization 160,061 245,317 405,378 Income (loss) from operations (704,872 ) 274,167 (430,705 ) Long-lived assets 4,485,333 750,180 5,235,513 For Three Months Ended September 30, 2014 United United Consolidated Revenues $ 954,013 $ 3,155,702 $ 4,109,715 Gross profit (Revenues less cost of products, excluding depreciation and amortization) 571,124 2,416,024 2,987,148 Depreciation and amortization 161,948 318,367 480,315 Income (loss) from operations (472,491 ) 355,588 (116,903 ) Long-lived assets 4,865,994 1,021,938 5,887,932 |
Business and Basis of Present23
Business and Basis of Presentation - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Segment | Sep. 30, 2014USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Number of business segments | Segment | 2 | |||
Amortization expense of developed software | $ 222,061 | $ 220,786 | $ 700,829 | $ 598,518 |
Supplemental Schedule of Non-24
Supplemental Schedule of Non-Cash Investing and Financing Activities - Additional Information (Detail) - Foreign Tax Authority [Member] - United Kingdom [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Current Year [Member] | ||||
Schedule Of Supplemental Cash Flow [Line Items] | ||||
Income taxes paid | $ 81,384 | $ 41,415 | ||
Prior Year [Member] | ||||
Schedule Of Supplemental Cash Flow [Line Items] | ||||
Income taxes paid | $ 305,911 | $ 498,200 |
Debt Obligations and Liquidity
Debt Obligations and Liquidity - Additional Information (Detail) - USD ($) | Apr. 17, 2014 | Oct. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 |
Debt Instrument [Line Items] | ||||
Repayment of note payable | $ 42,794 | $ 40,277 | ||
Fairford Holdings Limited [Member] | Promissory Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate on amount of loan advanced to company | 6.50% | |||
Fairford Holdings Limited [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Loan received form issuance note | $ 1,400,000 | |||
Repayment of note payable | $ 1,400,000 |
Basic and Diluted Net Income 26
Basic and Diluted Net Income Per Common Share - Calculation of Basic and Diluted Earnings (Loss) per Share (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net income / (loss) | $ (504,725) | $ (206,574) | $ (895,415) | $ 483,383 |
Weighted average shares of common stock outstanding used to compute basic earnings per share | 29,729,201 | 29,212,800 | 29,415,430 | 29,212,284 |
Additional common shares to be issued assuming exercise of stock options and stock warrants | 2,446,693 | |||
Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share | 29,729,201 | 29,212,800 | 29,415,430 | 31,658,977 |
Basic: | ||||
Net income / (loss) per share | $ (0.02) | $ (0.01) | $ (0.03) | $ 0.02 |
Weighted average common shares outstanding | 29,729,201 | 29,212,800 | 29,415,430 | 29,212,284 |
Diluted: | ||||
Net income / (loss) per share | $ (0.02) | $ (0.01) | $ (0.03) | $ 0.02 |
Weighted average common and common equivalent shares outstanding | 29,729,201 | 29,212,800 | 29,415,430 | 31,658,977 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) | Dec. 31, 2009$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Dec. 31, 2002shares | Dec. 31, 2009SEK / shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Additional shares granted | 2,000,000 | ||||||
Maximum exercisable period of stock options from the date of grant under Stock Incentive Plan | 10 years | ||||||
Options exercisable to purchase common stock | 2,960,921 | 2,960,921 | |||||
Future compensation costs related to non-vested options and RSU's | $ | $ 283,235 | $ 283,235 | |||||
Future compensation costs, weighted average period of recognition | 2 years 6 months | ||||||
Consideration for securing issuance | $ | $ 2,600,000 | ||||||
Portion of stock-based compensation included in selling, general and administrative expense | $ | 268,152 | $ 88,108 | |||||
Restricted Stock Units (RSUs) [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Future compensation costs related to non-vested options and RSU's | $ | 728,458 | $ 728,458 | |||||
Restricted Stock Units (RSUs) [Member] | 2015 Stock Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares, exercised | 172,805 | ||||||
Number of shares, vested | 308,869 | ||||||
Shares redeemed for cash | 85,243 | ||||||
Shares redeemed for cash, value | $ | $ 44,584 | ||||||
Stock option expense | $ | $ 268,152 | ||||||
Awards issued | 0 | ||||||
Selling, General and Administrative Expenses [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Portion of stock-based compensation included in selling, general and administrative expense | $ | $ 135,052 | $ 8,142 | $ 268,152 | $ 88,108 | |||
Minimum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercise period of stock options granted under the Plan | 1 year | ||||||
Maximum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercise period of stock options granted under the Plan | 5 years | ||||||
Class A Common Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Maximum number of share granted under Stock Incentive Plan | 1,500,000 | ||||||
Shares reserved for awards | 6,000,000 | 6,000,000 | |||||
Share available for grant | 5,504,475 | 5,504,475 | |||||
Class A Common Stock [Member] | Additional Warrant [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares callable by Warrant | 620,675 | 620,675 | |||||
Exercise price of Warrants | $ / shares | $ 0.22 | $ 0.22 | |||||
Class A Common Stock [Member] | Original Warrant [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares callable by Warrant | 419,495 | 419,495 | |||||
Exercise price of Warrants | $ / shares | $ 0.34 | $ 0.34 | |||||
Class A Common Stock [Member] | Fairford Holdings Limited [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Securities sold | 355,099 | ||||||
Price of securities sold | (per share) | $ 0.39 | SEK 2.80362 | |||||
Percentage of Company's outstanding Class A common stock beneficially owned by Fairford | 62.00% | 62.00% | |||||
Class A Common Stock [Member] | Fairford Europe [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares callable by Warrant | 1,040,170 | 1,040,170 | |||||
Class A Common Stock [Member] | 2015 Stock Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Maximum number of share granted under Stock Incentive Plan | 1,500,000 | ||||||
Shares reserved for awards | 5,000,000 | 5,000,000 | |||||
Class A Common Stock [Member] | Restricted Stock Units (RSUs) [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Non-vested RSUs shares outstanding | 3,098,614 | 3,098,614 | |||||
Class A Common Stock [Member] | Plan and Stock Incentive Plan Options [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding to purchase common stock | 2,960,921 | 2,960,921 | |||||
Options exercisable to purchase common stock | 2,960,921 | 2,960,921 |
Stock Based Compensation - Info
Stock Based Compensation - Information with Respect to Options (Detail) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options & RSU Shares, Outstanding, Beginning balance | shares | 5,811,746 |
Options & RSU Shares, Granted | shares | 2,519,507 |
Options & RSU Shares, Exercised | shares | (481,574) |
Options & RSU Shares, Expired | shares | (1,790,144) |
Options & RSU Shares, Outstanding, Ending balance | shares | 6,059,535 |
Exercise Price Range Per Share, Lower range limit, Outstanding, Beginning balance | $ 0 |
Exercise Price Range Per Share, Lower range limit, Granted | 0 |
Exercise Price Range Per Share, Lower range limit, Exercised | 0.09 |
Exercise Price Range Per Share, Lower range limit, Expired | 0 |
Exercise Price Range Per Share, Lower range limit, Outstanding, Ending balance | 0 |
Exercise Price Range Per Share, Upper range limit, Outstanding, Beginning balance | 0.40 |
Exercise Price Range Per Share, Upper range limit, Granted | 0.52 |
Exercise Price Range Per Share, Upper range limit, Exercised | 0.52 |
Exercise Price Range Per Share, Upper range limit, Expired | 0.52 |
Exercise Price Range Per Share, Upper range limit, Outstanding, Ending balance | 0.52 |
Weighted Average Exercise Price, Outstanding, Beginning balance | 0.21 |
Weighted Average Exercise Price, Granted | 0.351 |
Weighted Average Exercise Price, Exercised | 0.382 |
Weighted Average Exercise Price, Expired | 0.373 |
Weighted Average Exercise Price, Outstanding, Ending balance | $ 0.206 |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Options Exercisable (Detail) | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Option Shares | shares | 2,960,921 |
Exercise Price Range Per Share, Lower range limit | $ 0.08 |
Exercise Price Range Per Share, Upper range limit | 0.52 |
Weighted Average Exercise Price | $ 0.226 |
Aggregate Intrinsic Value | $ | $ 304,334 |
Weighted Remaining Contractual Term | 3 years 6 months |
Stock Based Compensation - Su30
Stock Based Compensation - Summary of Non-Vested Options and RSU's (Detail) | 9 Months Ended |
Sep. 30, 2015shares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unvested options and RSU's outstanding, January 1, 2015 | 1,376,832 |
Unvested options and RSU's, Granted | 2,519,507 |
Unvested options and RSU's, Expired | (260,623) |
Unvested options and RSU's, Vested | (537,102) |
Unvested options and RSU's outstanding, September 30, 2015 | 3,098,614 |
Stock Based Compensation - Opti
Stock Based Compensation - Option Valuation Model Assumptions (Detail) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Risk-free interest rate | 1.00% | 0.50% |
Dividend yield | 0.00% | 0.00% |
Volatility factor | 85.00% | 91.00% |
Expected lives | 5 years | 5 years |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Other income | $ 0 | $ 1,344,749 | |
Patent settlement fees | 3,100,000 | $ 0 | 3,100,000 |
Legal fees related to settlement | $ 1,755,251 | $ 1,755,251 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Unrecognized tax benefit | $ 160,818 | $ 156,502 | $ 160,818 | $ 156,502 |
Amounts accrued for interest and penalties | 0 | 0 | ||
Income tax expense | $ 79,099 | $ 85,892 | $ 141,405 | $ 198,832 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2015Segment | |
Segment Reporting [Abstract] | |
Number of reportable business segments | 2 |
Segment Information - Financial
Segment Information - Financial Information Summarizing Reportable Segments (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 3,491,853 | $ 4,109,715 | $ 11,285,749 | $ 12,139,253 |
Gross profit Revenues less cost of products, excluding depreciation and amortization | 2,520,681 | 2,987,148 | 8,206,487 | 8,948,738 |
Depreciation and amortization | 405,378 | 480,315 | 1,243,420 | 1,408,982 |
Income (loss) from operations | (430,705) | (116,903) | (755,884) | (633,282) |
Long-lived assets | 5,235,513 | 5,887,932 | 5,235,513 | 5,887,932 |
Operating Segments [Member] | Electronic Invoice Management [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,026,935 | 2,199,560 | 6,261,627 | 7,034,084 |
Gross profit Revenues less cost of products, excluding depreciation and amortization | 1,655,405 | 1,749,148 | 5,064,863 | 5,722,445 |
Depreciation and amortization | 238,755 | 312,489 | 716,444 | 956,318 |
Income (loss) from operations | 69,297 | (10,895) | 841,038 | 572,367 |
Long-lived assets | 3,607,637 | 4,394,319 | 3,607,637 | 4,394,319 |
Operating Segments [Member] | Call Accounting Management and Recording [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,464,918 | 1,910,155 | 5,024,122 | 5,105,169 |
Gross profit Revenues less cost of products, excluding depreciation and amortization | 865,276 | 1,238,000 | 3,141,624 | 3,226,293 |
Depreciation and amortization | 162,363 | 164,789 | 514,530 | 444,497 |
Income (loss) from operations | (274,874) | 160,931 | (421,656) | (46,309) |
Long-lived assets | 1,548,149 | 1,405,581 | 1,548,149 | 1,405,581 |
Corporate Allocation [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 4,260 | 3,037 | 12,446 | 8,167 |
Income (loss) from operations | (225,128) | (266,849) | (1,175,266) | (1,159,340) |
Long-lived assets | $ 79,727 | $ 88,032 | $ 79,727 | $ 88,032 |
Segment Information - Summary o
Segment Information - Summary of Financial Information by Geographic Location (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 3,491,853 | $ 4,109,715 | $ 11,285,749 | $ 12,139,253 |
Gross profit (Revenues less cost of products, excluding depreciation and amortization) | 2,520,681 | 2,987,148 | 8,206,487 | 8,948,738 |
Depreciation and amortization | 405,378 | 480,315 | 1,243,420 | 1,408,982 |
Income (loss) from operations | (430,705) | (116,903) | (755,884) | (633,282) |
Long-lived assets | 5,235,513 | 5,887,932 | 5,235,513 | 5,887,932 |
United States [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 685,146 | 954,013 | 2,648,688 | 3,121,197 |
Gross profit (Revenues less cost of products, excluding depreciation and amortization) | 333,938 | 571,124 | 1,540,853 | 2,101,967 |
Depreciation and amortization | 160,061 | 161,948 | 506,121 | 433,720 |
Income (loss) from operations | (704,872) | (472,491) | (1,400,490) | (1,435,596) |
Long-lived assets | 4,485,333 | 4,865,994 | 4,485,333 | 4,865,994 |
United Kingdom [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,806,707 | 3,155,702 | 8,637,061 | 9,018,056 |
Gross profit (Revenues less cost of products, excluding depreciation and amortization) | 2,186,743 | 2,416,024 | 6,665,634 | 6,846,771 |
Depreciation and amortization | 245,317 | 318,367 | 737,299 | 975,262 |
Income (loss) from operations | 274,167 | 355,588 | 644,606 | 802,314 |
Long-lived assets | $ 750,180 | $ 1,021,938 | $ 750,180 | $ 1,021,938 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) | Apr. 17, 2014 | Feb. 28, 2014 | Sep. 30, 2015 | Dec. 31, 2013 | Dec. 30, 2013 | Oct. 30, 2013 | Mar. 07, 2013 |
Fairford Holdings Limited [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of proportion of interest accrued on maturity date | 80.00% | ||||||
Lenders [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of proportion of interest accrued on maturity date | 10.00% | ||||||
Michael Reinarts [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of proportion of interest accrued on maturity date | 10.00% | ||||||
Buying Group [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Cash purchase price payable under proposal made by Related party to purchase common stock | $ 0.40 | $ 0.29 | |||||
Class A Common Stock [Member] | Fairford Holdings Limited [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of Company's outstanding Class A common stock beneficially owned by Fairford | 62.00% | ||||||
Class A Common Stock [Member] | Lenders [Member] | Fairford Holdings Limited [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of Company's outstanding Class A common stock beneficially owned by Fairford | 62.00% | ||||||
Promissory Note [Member] | Lenders [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Principal amount of promissory notes | $ 1,400,000 | ||||||
Amount of advanced received from lenders | $ 1,400,000 | ||||||
Principal paid to lenders | $ 700,000 | $ 700,000 | |||||
Promissory Note [Member] | Class A Common Stock [Member] | Lenders [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Expiry date of promissory note, description | The Company promised to pay to the Lenders, on demand made at any time following April 30, 2014, or if demand is not sooner made, on May 31, 2014 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - USD ($) | Oct. 18, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Subsequent Event [Line Items] | |||
Common stock, par value | $ 0.01 | $ 0.01 | |
Merger Sub [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Percentage of issued and outstanding Shares validly tendered | 67.00% | ||
Minimum percentage of outstanding Shares on a fully diluted basis | 90.00% | ||
Merger agreement contingent termination fee | $ 800,000 | ||
Merger Sub [Member] | Class A Common Stock [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, par value | $ 0.01 | ||
Common stock, cash purchase price | $ 0.61 |