Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Jun. 30, 2014 | Mar. 01, 2015 |
Entity Registrant Name | WAVE SYSTEMS CORP | ||
Entity Central Index Key | 919013 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $35 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 51,475,368 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 8,885 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ||
Cash and cash equivalents | $1,777,414 | $2,120,102 |
Accounts receivable, net of allowance for doubtful accounts of $-0- at December 31, 2014 and 2013, respectively | 1,820,945 | 2,730,077 |
Pledged receivables | 0 | 1,683,188 |
Prepaid expenses | 397,689 | 488,656 |
Total current assets | 3,996,048 | 7,022,023 |
Property and equipment, net | 411,755 | 596,820 |
Amortizable intangible assets, net | 2,008,227 | 2,590,920 |
Goodwill | 1,448,000 | 1,448,000 |
Other assets | 169,330 | 167,146 |
Total Assets | 8,033,360 | 11,824,909 |
Current Liabilities: | ||
Secured borrowings | 0 | 1,430,710 |
Accounts payable and accrued expenses | 3,918,493 | 6,789,274 |
Deferred revenue | 5,125,932 | 6,996,239 |
Total current liabilities | 9,044,425 | 15,216,223 |
Other long-term liabilities | 50,779 | 78,618 |
Royalty liability | 4,982,306 | 4,509,629 |
Long-term deferred revenue | 871,677 | 1,003,614 |
Total liabilities | 14,949,187 | 20,808,084 |
Stockholders' Deficit: | ||
Capital in excess of par value | 422,745,539 | 407,907,019 |
Accumulated deficit | -430,121,078 | -417,240,480 |
Total Stockholders' Deficit | -6,915,827 | -8,983,175 |
Total Liabilities and Stockholders' Deficit | 8,033,360 | 11,824,909 |
Class A Common Stock | ||
Stockholders' Deficit: | ||
Common Stock | 459,623 | 350,197 |
Class B Common Stock | ||
Stockholders' Deficit: | ||
Common Stock | $89 | $89 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $0 | $0 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, Authorized shares | 150,000,000 | 150,000,000 |
Common stock, shares issued | 45,962,324 | 35,019,740 |
Common stock, shares outstanding | 45,962,324 | 35,019,740 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, Authorized shares | 13,000,000 | 13,000,000 |
Common stock, shares issued | 8,885 | 8,885 |
Common stock, shares outstanding | 8,885 | 8,885 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Net revenues: | |||
Licensing and maintenance | $16,670,834 | $22,591,914 | $27,480,732 |
Services | 300,000 | 1,808,938 | 1,363,781 |
Total net revenues | 16,970,834 | 24,400,852 | 28,844,513 |
Operating expenses: | |||
Licensing and maintenance—cost of net revenues | 1,215,776 | 3,419,271 | 6,722,221 |
Services—cost of net revenues | 73,000 | 277,665 | 144,111 |
Selling, general and administrative | 18,794,273 | 26,829,636 | 32,632,237 |
Research and development | 10,333,607 | 11,380,258 | 19,055,894 |
Impairment of goodwill and intangible assets | 0 | 2,590,000 | 4,054,732 |
Total operating expenses | 30,416,656 | 44,496,830 | 62,609,195 |
Operating loss | -13,445,822 | -20,095,978 | -33,764,682 |
Other income (expense): | |||
Net currency transaction gain (loss) | -14,828 | -17,220 | 12,156 |
Gain on sale of eSign | 1,304,579 | 0 | 0 |
Net interest expense | -712,527 | -200,456 | -197,989 |
Total other income (expense) | 577,224 | -217,676 | -185,833 |
Loss before income tax expense | -12,868,598 | -20,313,654 | -33,950,515 |
Income tax expense | 12,000 | 10,610 | 12,033 |
Net loss | ($12,880,598) | ($20,324,264) | ($33,962,548) |
Loss per common share - basic and diluted (in dollars per share) | ($0.30) | ($0.68) | ($1.41) |
Weighted average number of common shares outstanding during the year (in shares) | 43,024,449 | 29,825,854 | 24,051,126 |
Consolidated_Statement_of_Stoc
Consolidated Statement of Stockholders' Equity (Deficit) (USD $) | Total | Capital in Excess of Par Value | Accumulated Deficit | Class A Common Stock | Class B Common Stock |
Common Stock | Common Stock | ||||
Balance at Dec. 31, 2011 | $11,540,575 | $374,270,219 | ($362,953,668) | $223,935 | $89 |
Balance (in shares) at Dec. 31, 2011 | 22,393,595 | 8,889 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | -33,962,548 | -33,962,548 | |||
Issuance of Class A Common Stock at prices ranging from $0.90 to $1.39, $0.90 to $2.90 and $2.60 to $9.12 per share, less issuance costs of $171,168, $188,627, and $289,617 for the year 2014, 2013, and 2012 respectively | 9,053,593 | 9,033,860 | 19,733 | ||
Issuance of Class A Common Stock at prices ranging from $0.90 to $1.39, $0.90 to $2.90 and $2.60 to $9.12 per share, less issuance costs of $171,168, $188,627, and $289,617 for the year 2014, 2013, and 2012 respectively (in shares) | 1,973,267 | ||||
Issuance of Class A Common Stock at $1.90, $2.00, and $2.57 per share, less issuance costs of $853,784, $250,200, and $129,761 for the year 2014, 2013, and 2012 respectively | 1,532,916 | 1,526,446 | 6,470 | ||
Issuance of Class A Common Stock at $1.90, $2.00, and $2.57 per share, less issuance costs of $853,784, $250,200, and $129,761 for the year 2014, 2013, and 2012 respectively (in shares) | 646,956 | ||||
Issuance of Class A Common Stock at $1.27 and $4.01 per share, less issuance costs of $121,781 and $259,984 for the year 2013 and 2012 respectively | 3,073,078 | 3,064,766 | 8,312 | ||
Issuance of Class A Common Stock at $1.27 and $4.01 per share, less issuance costs of $121,781 and $259,984 for the year 2013 and 2012 respectively (in shares) | 831,188 | ||||
Warrants exercised at $0.91 and $2.20 -$2.32 per share for the year 2014 and 2012 respectively | 320,500 | 319,050 | 1,450 | ||
Warrants exercised at $0.91 and $2.20 -$2.32 per share for the year 2014 and 2012 respectively (in shares) | 145,000 | ||||
Employee stock options exercised at $3.24 and $2.08 - $7.80 per share for the year 2013 and 2012 respectively | 79,503 | 79,275 | 228 | ||
Employee stock options exercised at $3.24 and $2.08 - $7.80 per share for the year 2013 and 2012 respectively (in shares) | 22,800 | 22,800 | |||
Cashless exercise of warrants at $2.20 per share for the year 2012 respectively | -101 | 101 | |||
Cashless exercise of warrants at $2.20 per share for the year 2012 respectively (in shares) | 10,111 | ||||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan at $0.94, $1.29, and $3.40 per share for the year 2014, 2013, and 2012 respectively | 474,233 | 472,838 | 1,395 | ||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan at $0.94, $1.29, and $3.40 per share for the year 2014, 2013, and 2012 respectively (in shares) | 139,480 | ||||
Shares of Class A Common Stock Issued pursuant To the Wave Employee Stock Purchase Plan at $0.88, $0.98, and $2.144 per share for the year 2014, 2013, and 2012 respectively | 191,862 | 190,966 | 896 | ||
Shares of Class A Common Stock Issued pursuant To the Wave Employee Stock Purchase Plan at $0.88, $0.98, and $2.144 per share for the year 2014, 2013, and 2012 respectively (in shares) | 89,571 | ||||
Stock based compensation | 4,830,831 | 4,830,831 | |||
Balance at Dec. 31, 2012 | -2,865,457 | 393,788,150 | -396,916,216 | 262,520 | 89 |
Balance (in shares) at Dec. 31, 2012 | 26,251,968 | 8,889 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | -20,324,264 | -20,324,264 | |||
Issuance of Class A Common Stock at prices ranging from $0.90 to $1.39, $0.90 to $2.90 and $2.60 to $9.12 per share, less issuance costs of $171,168, $188,627, and $289,617 for the year 2014, 2013, and 2012 respectively | 5,352,893 | 5,314,778 | 38,115 | ||
Issuance of Class A Common Stock at prices ranging from $0.90 to $1.39, $0.90 to $2.90 and $2.60 to $9.12 per share, less issuance costs of $171,168, $188,627, and $289,617 for the year 2014, 2013, and 2012 respectively (in shares) | 3,811,523 | ||||
Issuance of Class A Common Stock at $1.90, $2.00, and $2.57 per share, less issuance costs of $853,784, $250,200, and $129,761 for the year 2014, 2013, and 2012 respectively | 2,919,800 | 2,903,950 | 15,850 | ||
Issuance of Class A Common Stock at $1.90, $2.00, and $2.57 per share, less issuance costs of $853,784, $250,200, and $129,761 for the year 2014, 2013, and 2012 respectively (in shares) | 1,585,000 | ||||
Issuance of Class A Common Stock at $1.27 and $4.01 per share, less issuance costs of $121,781 and $259,984 for the year 2013 and 2012 respectively | 1,407,896 | 1,395,851 | 12,045 | ||
Issuance of Class A Common Stock at $1.27 and $4.01 per share, less issuance costs of $121,781 and $259,984 for the year 2013 and 2012 respectively (in shares) | 1,204,470 | ||||
Issuance of Class A Common Stock at $0.9725 per share, less issuance costs of $103,133 | 1,115,750 | 1,103,217 | 12,533 | ||
Issuance of Class A Common Stock at $0.9725 per share, less issuance costs of $103,133 (in shares) | 1,253,351 | ||||
Private placement of Class A Common Stock at $3.32 per share, less issuance costs of $90,000 | 910,001 | 906,989 | 3,012 | ||
Private placement of Class A Common Stock at $3.32 per share, less issuance costs of $90,000 (in shares) | 301,205 | ||||
Employee stock options exercised at $3.24 and $2.08 - $7.80 per share for the year 2013 and 2012 respectively | 42,039 | 41,909 | 130 | ||
Employee stock options exercised at $3.24 and $2.08 - $7.80 per share for the year 2013 and 2012 respectively (in shares) | 12,983 | 12,983 | |||
Issuance of Class A Common Stock for developed technology at $1.34 per share for the year 2013 respectively | 500,000 | 496,274 | 3,726 | ||
Issuance of Class A Common Stock for developed technology at $1.34 per share for the year 2013 respectively (in shares) | 372,578 | ||||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan at $0.94, $1.29, and $3.40 per share for the year 2014, 2013, and 2012 respectively | 171,796 | 170,467 | 1,329 | ||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan at $0.94, $1.29, and $3.40 per share for the year 2014, 2013, and 2012 respectively (in shares) | 132,970 | ||||
Shares of Class A Common Stock Issued pursuant To the Wave Employee Stock Purchase Plan at $0.88, $0.98, and $2.144 per share for the year 2014, 2013, and 2012 respectively | 91,803 | 90,864 | 939 | ||
Shares of Class A Common Stock Issued pursuant To the Wave Employee Stock Purchase Plan at $0.88, $0.98, and $2.144 per share for the year 2014, 2013, and 2012 respectively (in shares) | 93,916 | ||||
Cash paid for fractional shares in connection with reverse stock split | -274 | -272 | -2 | ||
Cash paid for fractional shares in connection with reverse stock split (in shares) | -224 | -4 | |||
Stock based compensation | 1,694,842 | 1,694,842 | |||
Balance at Dec. 31, 2013 | -8,983,175 | 407,907,019 | -417,240,480 | 350,197 | 89 |
Balance (in shares) at Dec. 31, 2013 | 35,019,740 | 8,885 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | -12,880,598 | -12,880,598 | |||
Issuance of Class A Common Stock at prices ranging from $0.90 to $1.39, $0.90 to $2.90 and $2.60 to $9.12 per share, less issuance costs of $171,168, $188,627, and $289,617 for the year 2014, 2013, and 2012 respectively | 5,383,009 | 5,328,904 | 54,105 | ||
Issuance of Class A Common Stock at prices ranging from $0.90 to $1.39, $0.90 to $2.90 and $2.60 to $9.12 per share, less issuance costs of $171,168, $188,627, and $289,617 for the year 2014, 2013, and 2012 respectively (in shares) | 5,410,450 | ||||
Issuance of Class A Common Stock at $1.90, $2.00, and $2.57 per share, less issuance costs of $853,784, $250,200, and $129,761 for the year 2014, 2013, and 2012 respectively | 9,074,780 | 9,022,524 | 52,256 | ||
Issuance of Class A Common Stock at $1.90, $2.00, and $2.57 per share, less issuance costs of $853,784, $250,200, and $129,761 for the year 2014, 2013, and 2012 respectively (in shares) | 5,225,560 | ||||
Warrants exercised at $0.91 and $2.20 -$2.32 per share for the year 2014 and 2012 respectively | 121,862 | 120,523 | 1,339 | ||
Warrants exercised at $0.91 and $2.20 -$2.32 per share for the year 2014 and 2012 respectively (in shares) | 133,914 | ||||
Employee stock options exercised at $3.24 and $2.08 - $7.80 per share for the year 2013 and 2012 respectively (in shares) | 0 | ||||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan at $0.94, $1.29, and $3.40 per share for the year 2014, 2013, and 2012 respectively | 99,495 | 98,441 | 1,054 | ||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan at $0.94, $1.29, and $3.40 per share for the year 2014, 2013, and 2012 respectively (in shares) | 105,454 | ||||
Shares of Class A Common Stock Issued pursuant To the Wave Employee Stock Purchase Plan at $0.88, $0.98, and $2.144 per share for the year 2014, 2013, and 2012 respectively | 58,839 | 58,167 | 672 | ||
Shares of Class A Common Stock Issued pursuant To the Wave Employee Stock Purchase Plan at $0.88, $0.98, and $2.144 per share for the year 2014, 2013, and 2012 respectively (in shares) | 67,206 | ||||
Stock based compensation | 209,961 | 209,961 | |||
Balance at Dec. 31, 2014 | ($6,915,827) | $422,745,539 | ($430,121,078) | $459,623 | $89 |
Balance (in shares) at Dec. 31, 2014 | 45,962,324 | 8,885 |
Consolidated_Statement_of_Stoc1
Consolidated Statement of Stockholders' Equity (Deficit) (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Statement of Stockholders' Equity [Abstract] | |||
Issuance of Class A Common Stock, per share, Lower range | $0.90 | $0.90 | $2.60 |
Issuance of Class A Common Stock, per share, Upper range | $1.39 | $2.90 | $9.12 |
Issuance of Class A Common Stock, issuance costs (in dollars) | $171,168 | $188,627 | $289,617 |
Issuance of Class A Common Stock, per share | $1.90 | $2 | $2.57 |
Issuance of Class A Common Stock, issuance costs (in dollars) | 853,784 | 250,200 | 129,761 |
Issuance of Class A Common Stock, per share | $1.27 | $4.01 | |
Issuance of Class A Common Stock, issuance costs (in dollars) | 121,781 | 259,984 | |
Issuance of Class A Common Stock, per share | $0.97 | ||
Issuance of Class A Common Stock, issuance costs (in dollars) | 103,133 | ||
Private placement of Class A Common Stock, per share | $3.32 | ||
Private placement of Class A Common Stock, issuance costs (in dollars) | $90,000 | ||
Warrants exercised, Lower range | $2.20 | ||
Warrants exercised, Upper range | $2.32 | ||
Exercise price of warrants (in dollars per share) | $0.91 | ||
Employee stock options exercised, Lower range | $2.08 | ||
Employee stock options exercised, Upper range | $7.80 | ||
Employee stock options exercised | $3.24 | ||
Issuance of Class A Common Stock for developed technology, per share | $1.34 | ||
Cashless exercise of warrants, per share | $2.20 | ||
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan, per share | $0.94 | $1.29 | $3.40 |
Shares of Class A Common Stock Issued pursuant to the Wave Employee Stock Purchase Plan, per share | $0.88 | $0.98 | $2.14 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | |||
Net loss | ($12,880,598) | ($20,324,264) | ($33,962,548) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 885,657 | 1,009,876 | 2,132,136 |
Share-based compensation expense | 209,961 | 1,694,842 | 4,830,831 |
Gain on sale of eSign | -1,304,579 | 0 | 0 |
Impairment of goodwill and purchased intangible assets | 0 | 4,205,000 | 7,477,832 |
Accretion of royalty liability | 97,300 | 81,400 | 67,500 |
Changes in assets and liabilities, net of effects from business acquisition: | |||
Decrease in accounts receivable | 1,161,610 | 2,315,840 | 1,900,250 |
Decrease (increase) in prepaid expenses and other current assets | 90,967 | -66,887 | 401,992 |
(Increase) decrease in other assets | -2,184 | 157,468 | 11,993 |
(Decrease) increase in accounts payable and accrued expenses | -2,960,783 | -735,449 | 924,087 |
(Decrease) increase in deferred revenue | -1,832,745 | 238,454 | 106,922 |
Increase (decrease) in royalty liability | 386,377 | -103,900 | 321,076 |
(Decrease) increase in other long-term liabilities | -27,839 | -19,378 | 31,713 |
Net cash used in operating activities | -16,176,856 | -11,546,998 | -15,756,216 |
Cash flows from investing activities: | |||
Acquisition of property and equipment | -117,899 | -186,715 | -169,660 |
Internal-use software development costs | 0 | -226,000 | 0 |
Proceeds from sale of eSign | 1,214,082 | 0 | 0 |
Net cash provided by (used in) investing activities | 1,096,183 | -412,715 | -169,660 |
Cash flows from financing activities: | |||
Payments on capital lease obligation | 0 | -44,658 | -72,075 |
Net proceeds from issuance of common stock | 14,457,789 | 11,706,066 | 13,659,587 |
Proceeds from employee stock purchase plans | 158,334 | 263,599 | 666,095 |
Proceeds from employee stock option exercises | 0 | 42,039 | 79,503 |
Proceeds from exercise of warrants | 121,862 | 0 | 320,500 |
Net cash provided by financing activities | 14,737,985 | 11,967,046 | 14,653,610 |
Net (decrease) increase in cash and cash equivalents | -342,688 | 7,333 | -1,272,266 |
Cash and cash equivalents at beginning of year | 2,120,102 | 2,112,769 | 3,385,035 |
Cash and cash equivalents at end of year | 1,777,414 | 2,120,102 | 2,112,769 |
Non-cash financing activities: | |||
Issuance of common stock for developed technology | 0 | 500,000 | 0 |
Cashless exercise of warrants | 0 | 0 | 404 |
Cash paid during the year for: | |||
Interest | 116,209 | 108,462 | 119,763 |
Income taxes | $7,895 | $8,816 | $78,235 |
Business_of_the_Company
Business of the Company | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business of the Company | Business of the Company |
Wave Systems Corp. ("Wave" or "the Company") reduces the complexity, cost and uncertainty of data protection by starting inside the device. Unlike other vendors who try to secure information by adding layers of software for security, Wave leverages the hardware security capabilities built directly into endpoint computing platforms themselves. Wave has been among the foremost experts on this growing trend, leading the way with first-to-market solutions and helping shape standards through its work as a board member for the Trusted Computing Group (the "TCG"). |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies |
(a) Basis of Consolidation | |
The consolidated financial statements include the financial statements of Wave, Wave Systems Holdings, Inc., a wholly owned subsidiary, Safend, Ltd. (and its wholly owned subsidiary, Safend, Inc., collectively referred to as "Safend"), a wholly owned subsidiary and Wavexpress, Inc. a majority-owned subsidiary that is dormant. All intercompany accounts and transactions have been eliminated in consolidation. | |
(b) Foreign Currency Translation | |
The functional currency of Safend is the U.S dollar. Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Foreign currency transaction gains or losses are credited or charged to the consolidated statements of operations as incurred as a component of other income (expense), net. | |
(c) Use of Estimates | |
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to, depreciation and amortization, revenue recognition, accounts receivable reserves, valuation of long-lived and intangible assets, contingencies and share-based compensation. Actual results could differ from those estimates. | |
(d) Cash and Cash Equivalents | |
Wave considers all highly liquid instruments with an original or remaining maturity of three months or less to be cash equivalents. | |
(e) Accounts Receivable and Allowance For Doubtful Accounts | |
Included in accounts receivable at December 31, 2014 and 2013 are unbilled amounts totaling $164,834 and $125,497, respectively. | |
The determination of the allowance for doubtful accounts is based on management's estimate of uncollectible accounts receivable. Management records specific reserves for receivable balances that are considered high risk of non-collectability due to known facts regarding the customer. | |
(f) Accounting for Transfers of Financial Assets | |
Wave derecognizes financial assets, specifically accounts receivable, when control has been surrendered in compliance with ASC Topic 860, Transfers and Servicing. Transfers of accounts receivable that meet the requirements of ASC 860 for sale accounting treatment are removed from the balance sheet and gains or losses on the sale are recognized. If the conditions for sale accounting treatment are not met, or are no longer met, accounts receivable transferred are classified as collateralized receivables in the consolidated balance sheets and cash received from these transactions is classified as secured borrowings. All transfers of assets are accounted for as secured borrowings. Transaction costs associated with secured borrowings, if any, are treated as borrowing costs and recognized in interest expense. | |
(g) Concentrations | |
Sales to Wave's largest customer in 2014, 2013 and 2012, Dell, Inc., were approximately 32%, 46% and 55% of revenue, respectively. Accounts receivable at December 31, 2014, 2013 and 2012 included receivables from Dell, Inc. and its affiliates of $134,621, $1,025,377 and $1,187,398, respectively. At December 31, 2014 and 2013, $0 and $1,683,188, respectively, of Dell receivables are classified as pledged receivables on the consolidated balance sheet. | |
(h) Property and Equipment | |
Property and equipment, including purchased computer software, are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets which range from between 3 years to 5 years. Amortization of leasehold improvements is computed using the shorter of the useful life or remaining lease term which range from between 3 years and 4 years. | |
(i) Capitalized internal-use software development costs | |
The Company follows the provisions of ASC Topic 350-40, Intangibles Goodwill and Other—Internal Use Software. ASC Topic 350-40 provides guidance for determining whether computer software is internal-use software and also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The capitalized costs as of December 31, 2014 and 2013 are related to Wave's cloud platform that is hosted by the Company and accessed by its clients on a subscription basis. The Company expenses all costs incurred during the preliminary project stage of development and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company records amortization of the software on a straight-line basis over five, which is the estimated useful life of the software. At each balance sheet date, management evaluates the unamortized capitalized software costs for potential impairment by comparing the balance to the net realizable value of the products. | |
(j) Income Taxes | |
Wave accounts for income taxes under the asset and liability method. As such, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At December 31, 2014 and 2013, a full valuation allowance has been recorded against the gross deferred tax asset since management believes that, after considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, it is more likely than not that these assets will not be realized. Wave classifies any interest and penalties related to uncertain tax positions as components of the income tax provision. | |
(k) Share-based Compensation | |
Wave recognizes compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to the Employee Stock Purchase Plan. Share-based compensation expense recognized is based on the value of the portion of share-based payment awards that is ultimately expected to vest and has been reduced for estimated forfeitures. Wave determines the fair value of share-based payment awards on the date of the grant using the Black-Scholes option pricing method which is affected by Wave's stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the estimated term of the award and Wave's estimated stock price volatility. | |
(l) Research and Development and Software Development Costs | |
Research and development costs are expensed as incurred. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products. | |
(m) Loss Per Share | |
Basic net loss per common share has been calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is also computed using the weighted average number of common shares and includes dilutive potential common shares outstanding. Dilutive potential common shares consist primarily of employee stock options and stock warrants. Diluted net loss per share is equal to basic net loss per share and is therefore not presented separately in the financial statements. The weighted average number of potential common shares that would have been included in diluted loss per share had their effect not been anti-dilutive for each of the years ended December 31, 2014, 2013 and 2012 were approximately 144,000 shares, 99,000 shares and 615,000 shares, respectively. Employee stock options and other stock warrants to purchase a weighted average of approximately 6,104,000, 5,504,000 and 3,669,000 shares were outstanding as of December 31, 2014, 2013 and 2012 respectively, but are not included in the computation of diluted loss per share because their exercise price was greater than the average share price of Wave's common shares. | |
(n) Valuation of Long Lived Assets | |
We review purchased intangible assets with finite lives for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Recoverability of asset groups is assessed based on the estimated undiscounted future cash flows expected to be generated by the asset group, including its ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. | |
(o) Goodwill | |
We review goodwill for impairment annually and whenever events or changes in circumstances indicate the fair value of a reporting unit is more likely than not below its carrying value. If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss. We perform a quantitative test and determine the fair value of the reporting unit using the income approach. Under the income approach, we calculate the fair value of the reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. The reporting unit’s fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss. | |
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates and future economic and market conditions. We base our fair value estimates on assumptions we believe to be reasonable but they are unpredictable and inherently uncertain. Actual future results may differ from those estimates. | |
We will continue to evaluate goodwill on an annual basis as of September 30 and whenever events or changes in circumstances, such as significant adverse changes in business climate or operating results or changes in management’s business strategy, indicate that there may be a potential indicator of impairment. | |
(p) Revenue Recognition | |
Wave's business model targets revenues from various sources including software products and development contracts. Many of these sales arrangements include multiple-elements and/or require significant modification or customization of Wave's software. | |
Wave recognizes revenue when 1) persuasive evidence of an arrangement exists, 2) delivery has occurred or services have been rendered, 3) fees are fixed or determinable and 4) collectability is reasonably assured. If we determine that any one of the four criteria is not met, we will defer recognition of revenue until all the criteria are met. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue. | |
Licensing and Maintenance | |
Wave receives revenue from licensing its software through distribution arrangements with its OEM partners, license upgrade agreements with end users of the products, software development and other services including maintenance. Wave applies software revenue recognition guidance to all transactions except those where no software is involved. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured. Persuasive evidence is generally a binding purchase order or license agreement. Delivery occurs when product is shipped for its OEM distribution arrangements, or delivered via a license key for our license upgrade agreements. | |
Wave enters into perpetual software license agreements through direct sales to customers and indirect sales through its OEM partners, distributors and resellers. Wave has defined its two classes of end user customers: large customers, whose orders are in excess of 5,000 licenses and small customers, whose orders are less than 5,000 licenses. These license upgrade agreements generally include a maintenance component. For arrangements with multiple elements, including software licenses, maintenance and/or services, revenue is allocated and deferred in amounts equivalent to the vendor specific objective evidence ("VSOE") of fair value for the undelivered elements and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as license revenue. VSOE of fair value is based upon the price for which the undelivered element is sold separately. | |
During the year ended December 31, 2014, Wave further stratified the VSOE of fair value of maintenance analysis to align it with current sales trends with respect to product mix and maintenance terms. The following represents the resulting updates to VSOE of fair value of maintenance as a result of such further stratification. | |
·Wave products: | |
·VSOE of fair value of maintenance is only applied to bundled license and maintenance arrangements with maintenance terms of one year and less than 5,000 licenses. | |
Wave has VSOE of fair value of maintenance for its small class of customers based on independent one-year maintenance renewals for its EMBASSY Remote Administration Server (“ERAS”) for Self Encrypting Drives (“SED”) product and its Protector product. As a result, for the ERAS SED and Protector small customer class licenses with maintenance bundled, Wave allocates the arrangement consideration to the elements in multi-element arrangements using the residual method. Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee for perpetual licenses is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met. | |
When VSOE of fair value for the undelivered elements does not exist, as is the case for Wave’s maintenance for all products other than ERAS SED and Protector, large customer class ERAS SED and Protector orders, and small customer class ERAS SED and Protector orders when maintenance terms are in excess of one year, the entire arrangement fee is recognized ratably over the performance period as licensing and maintenance revenue. | |
Wave’s deferred revenue consists of the unamortized maintenance for sales to its small class of customers and bundled license and maintenance arrangements where VSOE does not exist. | |
Licensing and maintenance—cost of net revenues includes customer support personnel costs, foreign tax withholdings, amortization expense of the developed technology intangible asset, costs associated with providing consulting services and related share-based compensation expense. | |
Services | |
Revenue from time and material service contracts is recognized as the services are provided. Revenue from fixed price, long-term service or development contracts is recognized using the percentage of completion method or the completed contract method. The determination between use of the completed contract method and the percentage of completion method is based on our ability to reasonably estimate the costs to fulfill the contract. The Company measures the percentage of completion by reference to the proportion of contract hours incurred for work performed to date to the estimated total contract hours expected to be incurred. Losses on fixed price contracts are recognized during the period in which such losses are identified. | |
Services—cost of net revenues includes non-recurring time and materials costs incurred in connection with fixed price contracts. | |
(q) Immaterial Correction of an Error | |
During the third quarter of 2014, we identified an error in our accounting for share-based compensation recorded in fiscal years 2013, 2012 and 2011and through the six-months ended June 30, 2014. We assessed the materiality of the error on prior periods’ financial statements and concluded that the error was not material to any of our prior period annual or current and prior period interim financial statements. We elected to correct the error in the three-month period ended September 30, 2014 by decreasing operating expenses by $820,000 and decreasing capital in excess of par value on the consolidated balance sheet by the same amount. For the three and nine month periods ended September 30, 2014, loss per basic and diluted share decreased by $0.02 as a result of the correction. | |
During the fourth quarter of 2014, we identified an error in our accounting for the royalty liability for grants received from the Israeli government through the Office of the Chief Scientist ("OCS") for fiscal years 2013 and 2012 and through the nine months ended September 30, 2014. We assessed the materiality of the error on prior periods' financial statements and concluded that the error was not material to any of our prior period annual or current and prior period interim financial statements. We elected to correct the error in the three-month period ended December 31, 2014 by increasing interest expense by $580,000 and increasing the royalty liability on the consolidated balance sheet by the same amount. For the three and twelve month periods ended December 31, 2014, loss per basic and diluted share decreased by $0.01as a result of the correction. | |
(r) Recently Adopted Accounting Pronouncements | |
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements - Going Concern, which amends the disclosures of uncertainties about an entity's ability to continue as a going concern. The amendments provide guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce the diversity in the timing and content of footnote disclosures. The Company is required to adopt the amendments in the first quarter of 2017. Early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (Topic 606), which amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is required to adopt the amendments in the first quarter of 2017. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of these amendments and the transition alternatives on its Consolidated Financial Statements. | |
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Components of an Entity, which updates the definition of discontinued operations under GAAP. Going forward, only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. Previously, a component of an entity that is a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. Additionally, the condition that the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction has been removed. The effective date for the revised standard is for applicable transactions that occur within annual periods beginning on or after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company adopted this standard in the third quarter of 2014. |
Reverse_Stock_Split
Reverse Stock Split | 12 Months Ended |
Dec. 31, 2014 | |
Reverse Stock Split | |
Reverse Stock Split | Reverse Stock Split |
On June 28, 2013, our Board of Directors approved a reverse stock split of our common stock at a ratio of 1-for-4, causing each four outstanding shares of Class A Common Stock and Class B Common Stock to convert automatically into one share of Class A Common Stock or Class B Common Stock, respectively. The par value of Class A Common Stock and Class B Common Stock remains $0.01 per share. The reverse split became effective on July 1, 2013. Stockholders' equity has been restated to give retroactive recognition to the reverse split for all periods presented by reclassifying the excess par value resulting from the reduced number of shares from common stock to paid-in capital. Except as otherwise noted, all references to common share and per common share amounts (including warrant shares, shares reserved for issuance and applicable exercise prices) for all periods presented have been retroactively restated to reflect this reverse split. |
Liquidity
Liquidity | 12 Months Ended | |
Dec. 31, 2014 | ||
Liquidity | ||
Liquidity | Liquidity | |
The accompanying consolidated financial statements have been prepared assuming that Wave will continue as a going concern. Wave has incurred substantial operating losses since its inception, and as of December 31, 2014, has an accumulated deficit of approximately $430,121,000. We also expect Wave will incur an operating loss for the fiscal year 2015. As of December 31, 2014, Wave had negative working capital of approximately $5,048,000. | ||
If Wave is not successful in executing its business plan, Wave will not generate enough revenue to fund its cash flow requirements for the year ended December 31, 2015. As of December 31, 2014, we had approximately $1,777,000 of cash on hand. Given Wave's forecasted cash requirements for the twelve-months ending December 31, 2015, and our cash balance as of December 31, 2014, Wave will be required to raise additional capital prior to December 31, 2015 if its sales and operating performance do not meet expectations. Wave's ability to raise additional capital is primarily based on two sources: | ||
• | Sales of registered Class A Common Stock under a $15,000,000 shelf registration statement filed with the U.S. Securities and Exchange Commission ("SEC") on December 18, 2014 and declared effective by the SEC on January 7, 2015 ("2015 shelf registration statement"); and | |
• | Sales of Class A Common Stock through private placements. | |
On January 26, 2015, Wave sold 5,513,044 shares of Class A Common Stock at $0.65 per share for gross proceeds of $3,583,479. This financing was completed under the 2015 shelf registration statement. Wave also issued warrants to the subscribers to purchase 2,205,216 shares of Class A Common Stock at an exercise price of $0.70 per share. These warrants expire on July 26, 2020. Security Research Associates, Inc. ("SRA") entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay SRA a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $3,338,000 in net proceeds after deducting the placement agent fees of approximately $215,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. In connection with the financing, Wave also issued warrants to SRA to purchase up to 330,783 shares of Wave Class A Common Stock for $0.70 per share. These warrants expire on July 26, 2018. | ||
For registered offerings, Wave is required to calculate the amount of capital the Company is allowed to raise in accordance with the General Instruction I.B.6. on Form S-3 (“the one-third rule”). The one-third rule restricts the amount of capital that can be raised in a 12-month period provided that the registrant’s aggregate market value of the common equity held by non-affiliates is less than $75 million. As a result of the application of the one-third rule, the funds available on the 2015 shelf registration statement are reduced. Until Wave attains an aggregate market value of $75 million or more for shares held by non-affiliates, its available funds under the 2015 shelf registration statement will remain restricted to the one-third rule computation. To determine the amount available under the one-third rule for future financings, the aggregate market value of the common equity is calculated using the price at which the common equity was last sold, or the average of the bid and asked prices of the common equity as of a date within 60 days prior to the date of filing. As of March 2, 2015, approximately $9,872,000 in gross proceeds remains under the 2015 shelf registration statement, however Wave is restricted to $9,203,000 as of such date due to the one-third rule. | ||
Wave will be required to sell shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives, to raise additional capital to continue to fund its operations for the twelve months ending December 31, 2015. If Wave is not successful in executing its business plan, it will be required to sell additional shares of common stock, preferred stock, obtain debt financing or engage in a combination of these financing alternatives or it could be forced to reduce expenses which may significantly impede its ability to meet its sales, marketing and development objectives, cease operations or merge with another company. No assurance can be provided that any of these initiatives will be successful. Due to its current cash position, cash needs over the next year and beyond, and the uncertainty as to whether it will achieve its sales forecast for its products and services, substantial doubt exists with respect to Wave's ability to continue as a going concern. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property and Equipment | Property and Equipment | |||||||
Property and equipment as of December 31 consisted of the following: | ||||||||
2014 | 2013 | |||||||
Computer equipment | $ | 2,729,409 | $ | 4,391,637 | ||||
Furniture, fixtures and improvements | 812,977 | 812,977 | ||||||
Computer software | 751,248 | 2,725,290 | ||||||
4,293,634 | 7,929,904 | |||||||
Less: Accumulated depreciation and amortization | (3,881,879 | ) | (7,333,084 | ) | ||||
Total | $ | 411,755 | $ | 596,820 | ||||
Depreciation and amortization expense on property and equipment amounted to approximately $303,000, $461,000 and $535,000 for the years ended December 31, 2014, 2013 and 2012, respectively. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets | |||||||||||||||||
Goodwill | ||||||||||||||||||
The following schedule presents the changes in the carrying amount of goodwill associated with the Safend reporting unit during the years ended December 31, 2014 and 2013: | ||||||||||||||||||
Balance as of December 31, 2012 | $ | 4,038,000 | ||||||||||||||||
Impairment loss | (2,590,000 | ) | ||||||||||||||||
Balance as of December 31, 2013 | 1,448,000 | |||||||||||||||||
Impairment loss | — | |||||||||||||||||
Balance as of December 31, 2014 | $ | 1,448,000 | ||||||||||||||||
Wave tests goodwill for impairment annually on September 30 and during interim periods whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Wave uses a fair value approach in testing goodwill for impairment in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other. The goodwill impairment test involves a two-step process. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss. The Company completed its annual goodwill impairment test as of September 30, 2014 which resulted in no impairment of goodwill. | ||||||||||||||||||
During the fourth quarter of 2012 and the first quarter of 2013, the Company determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis for the Safend reporting unit. These indicators included, among others, significantly lower than expected revenue, identification of increased competition for transactions involving Safend products, inability of the combined sales force to close large transactions and downward revisions to management's short-term and long-term forecast for Safend. The revised forecast reflected changes related to revenue growth rates, current market trends, expected deal synergies and other expectations impacting the anticipated short-term and long-term operating results of Safend. Due to the aforementioned indicators, the Company concluded that there were qualitative factors for the Safend unit that indicated it is more likely than not that the fair value of the Safend reporting unit was less than its carrying amount. | ||||||||||||||||||
The Company estimates the fair value of the Safend reporting units using the income approach. Under the income approach, the Company calculates the fair value of the Safend reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. The inputs used for the income approach are significant unobservable inputs, or Level 3 inputs, as described in ASC Topic 820, Fair Value Measurement. | ||||||||||||||||||
When indicators of impairment are present, such as those noted above, the Company tests long-lived assets (other than goodwill) for recoverability by comparing the carrying value of an asset group to its undiscounted cash flows. The Company completed its annual long-lived asset impairment test as of September 30, 2014 which resulted in no impairment of the assets. Based on the results of the recoverability test during the first quarter of 2013 and fourth quarter of 2012, the Company determined that the carrying value of the Safend asset group exceeded its undiscounted cash flows and was therefore not recoverable. The Company estimated the fair value of the intangible assets under an income approach as described above. Based on the analysis, the Company recorded impairment charges of $1,600,000 and $5,300,000 on intangible assets during the first quarter of 2013 and fourth quarter of 2012, respectively. The decline in the fair value of the Safend intangible assets is attributable to the same factors as discussed above for the fair value of the Safend reporting unit. | ||||||||||||||||||
After adjusting the carrying value of the reporting unit for the impairment of the intangibles noted above in the first quarter of 2013 and the fourth quarter of 2012, the Company completed the two step goodwill impairment test for the Safend reporting unit. This test resulted in an implied fair value of goodwill substantially below the carrying value of the goodwill. As a result, the Company recorded a goodwill impairment charge of $2.2 million during the fourth quarter of 2012, which resulted in a $4,038,000 remaining carrying value of Safend goodwill as of December 31, 2012 and an additional goodwill impairment charge of $2,600,000 during the first quarter of 2013, which resulted in a $1,448,000 remaining carrying value of Safend goodwill as of December 31, 2013. The goodwill impairment charge totaling approximately $2,600,000 for the year ended December 31, 2013 and the impairment charge totaling approximately $4,100,000 for the year ended December 31, 2012 which consists of the goodwill impairment of approximately $2,200,000 and an additional $1,900,000 of impairment on the customer relationship and in-process technology intangible assets, are included in the impairment of goodwill and intangible assets line item in the consolidated statements of operations. The developed technology impairment charge of approximately $1,600,000 and $3,400,000 for the years ended December 31, 2013 and 2012, respectively, are included in the licensing and maintenance—cost of net revenues line item in the consolidated statements of operations. | ||||||||||||||||||
Intangible Assets | ||||||||||||||||||
The following schedule presents the change in the carrying value of intangible assets as of December 31, 2014 and 2013: | ||||||||||||||||||
December 31, 2014 | ||||||||||||||||||
Intangible Asset | Gross | Accumulated | Accumulated | Net | Weighted | |||||||||||||
Carrying | Amortization | Impairment | Average | |||||||||||||||
Amount | Loss | Remaining | ||||||||||||||||
Useful Life | ||||||||||||||||||
(in years) | ||||||||||||||||||
Developed Technology | $ | 6,426,000 | $ | (1,292,297 | ) | $ | (5,038,100 | ) | $ | 95,603 | 3.8 | |||||||
Customer Relationships | 3,972,000 | (889,327 | ) | (1,786,673 | ) | 1,296,000 | 6.8 | |||||||||||
Internal-use software | 726,000 | (182,710 | ) | — | 543,290 | 3.8 | ||||||||||||
Acquired Patents | 1,100,000 | (1,026,666 | ) | — | 73,334 | 0.4 | ||||||||||||
$ | 12,224,000 | $ | (3,391,000 | ) | $ | (6,824,773 | ) | $ | 2,008,227 | |||||||||
31-Dec-13 | ||||||||||||||||||
Intangible Asset | Gross | Accumulated | Accumulated | Net | Weighted | |||||||||||||
Carrying | Amortization | Impairment | Average | |||||||||||||||
Amount | Loss | Remaining | ||||||||||||||||
Useful Life | ||||||||||||||||||
(in years) | ||||||||||||||||||
Developed Technology | $ | 6,426,000 | $ | (1,266,803 | ) | $ | (5,038,100 | ) | $ | 121,097 | 4.8 | |||||||
Customer Relationships | 3,972,000 | (697,327 | ) | (1,786,673 | ) | 1,488,000 | 7.8 | |||||||||||
Internal-use software | 726,000 | (37,510 | ) | — | 688,490 | 4.8 | ||||||||||||
Acquired Patents | 1,100,000 | (806,667 | ) | — | 293,333 | 1.4 | ||||||||||||
$ | 12,224,000 | $ | (2,808,307 | ) | $ | (6,824,773 | ) | $ | 2,590,920 | |||||||||
Amortization expense associated with intangible assets was approximately $583,000, $548,000 and $1,597,000 for the years ended December 31, 2014, 2013 and 2012 respectively. The estimated amortization expense for intangible assets for the next five years and thereafter is as follows: | ||||||||||||||||||
Period | Estimated | |||||||||||||||||
Amortization | ||||||||||||||||||
Expense | ||||||||||||||||||
2015 | $ | 436,028 | ||||||||||||||||
2016 | 362,694 | |||||||||||||||||
2017 | 362,694 | |||||||||||||||||
2018 | 318,811 | |||||||||||||||||
2019 | 192,000 | |||||||||||||||||
Thereafter | 336,000 | |||||||||||||||||
Total | $ | 2,008,227 | ||||||||||||||||
Secured_Borrowings_and_Pledged
Secured Borrowings and Pledged Receivables | 12 Months Ended |
Dec. 31, 2014 | |
Transfers of Financial Assets Accounted for as Secured Borrowings [Abstract] | |
Secured Borrowings and Pledged Receivables | Secured Borrowings and Pledged Receivables |
Pursuant to agreements entered into on April 23, 2012 with The Receivables Exchange ("TRE") and on November 26, 2013 with CapFlow Funding Group Managers LLC ("CapFlow), both of which are unrelated third parties, Wave has transferred certain accounts receivable to buyers which are accounted for as secured borrowings. The transferred receivables are classified as pledged receivables and Wave's obligation to repurchase the transferred receivables is presented as secured borrowings on the consolidated balance sheet. The carrying value of each secured borrowing approximates 85% of each associated pledged receivable and takes into consideration a 15% holdback provision per the TRE and CapFlow agreements. The customers' payment of the pledged receivables constitutes the repayment of the related amounts borrowed. The respective financial institution will then remit the remaining 15% holdback to Wave less interest. Beginning on November 26, 2013 Wave no longer transfers accounts receivable to TRE and utilizes CapFlow exclusively. The interest rate on the secured borrowings was 1.50% for every thirty days outstanding, or an annual effective rate of 18%. | |
With Wave's approval, CapFlow establishes arrangements with buyers providing for borrowings that are secured by our accounts receivable, and for which recourse exists against Wave. Wave can be required to repurchase the receivables under certain circumstances in case of specific defaults by our customers as set forth in the program terms. CapFlow acts as the servicing agent for receivables transferred to buyers. CapFlow collects the pledged receivables from Wave's customers and makes the repayment to the buyers on its behalf once the receivables are collected. | |
At December 31, 2014 and 2013, receivables totaling $0 and $1,683,188, respectively, were transferred to CapFlow, and TRE, respectively, remain uncollected and are subject to repurchase. The secured borrowings totaled $0 and $1,430,710 as of December 31, 2014 and 2013, respectively. Wave recognized $35,227 and $117,907 of interest expense associated with the secured borrowings for the years ended December 31, 2014 and 2013, respectively. Proceeds from the transfer of receivables are included in cash provided by operating activities in the consolidated statements of cash flows. Proceeds from the transfer of pledged receivables were $1,693,450 and $8,316,898 for the years ended December 31, 2014 and 2013, respectively. CapFlow and TRE collected $1,693,450 and $6,886,188 of pledged receivables in the years ended December 31, 2014 and 2013, respectively, which thereby reduced Wave's repurchase obligation and were accounted for as reductions of pledged receivables and secured borrowings on the consolidated balance sheet. No pledged receivables were repurchased by the Company during the years ended December 31, 2014 and 2013. The changes in pledged receivables and secured borrowings on the consolidated balance sheets are included within the change in accounts receivable on the consolidated statements of cash Flows. |
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses | |||||||
The following schedule presents the details of accounts payable and accrued expenses as of December 31, 2014 and 2013: | ||||||||
2014 | 2013 | |||||||
Accounts payable | $ | 1,080,167 | $ | 1,808,335 | ||||
Accrued payroll and related costs | 2,211,565 | 3,878,131 | ||||||
Accrued consulting and professional fees | 157,500 | 50,000 | ||||||
Royalty liability | 175,000 | 164,000 | ||||||
State & local taxes payable | 8,508 | 23,300 | ||||||
Other accrued expenses | 285,753 | 865,508 | ||||||
Total accounts payable and accrued expenses | $ | 3,918,493 | $ | 6,789,274 | ||||
Preferred_Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Preferred Stock | Preferred Stock |
Wave has authorized the issuance of 2,000 shares of convertible preferred stock having a par value of $.01 per share. At December 31, 2014, and 2013, -0- shares of convertible preferred stock are issued and outstanding. |
Common_Stock
Common Stock | 12 Months Ended |
Dec. 31, 2014 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | Common Stock |
2014 Issuances | |
On June 11, 2014, Wave entered into agreements with certain institutional investors for a private placement of 5,225,560 shares of its Class A Common Stock at a price of $1.90 per share yielding gross proceeds of $9,928,564. This financing was completed under the 2013 shelf registration statement together with the related registration statement on Form S-3 filed pursuant to Rule 462(b). Craig-Hallum Capital Group LLC ("Craig-Hallum") entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay Craig-Hallum a fee equal to 7% of the gross proceeds of this offering. We realized approximately $9,075,000 in net proceeds after deducting the placement agent fees of $695,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $159,000. In connection with the financing, we also issued warrants to the subscribers to purchase up to $2,090,224 shares of Wave Class A Common Stock for $1.90 per share. These warrants expire on June 11, 2019. The warrants have been accounted for as equity. A prospectus supplement related to the offering was filed with the SEC on June 13, 2014. | |
During the year ended December 31, 2014, Wave received proceeds of $5,383,009 after deducting offering costs of approximately $172,000, in connection with the issuance of 5,410,450 shares of Class A Common Stock in its at the market offerings through MLV & Co. LLC ("MLV"). The shares were sold at prices ranging from $0.90 - $1.39 per share. | |
During the year ended December 31, 2014, Wave received gross proceeds of $121,862 in connection with the issuance of 133,914 shares of Class A Common Stock upon the exercise of warrants that were granted to investors as part of Wave's December 2013 financing. The warrants were exercised at $0.91 per share. | |
On December 1, 2014, Wave issued 67,206 shares of Class A Common Stock to Wave employees for $0.88 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $58,839 from the sale of these shares. | |
On June 1, 2014, Wave issued 105,454 shares of Class A Common Stock to Wave employees for $0.94 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $99,495 from the sale of these shares. | |
2013 Issuances | |
On December 18, 2013, Wave sold 1,253,351 shares of Class A Common Stock at $0.9725 per share for gross proceeds of $1,218,884. This financing was completed under the 2013 shelf registration statement. Wave also issued warrants to the subscribers to purchase 626,674 shares of Class A Common Stock at an exercise price of $0.91 per share. These warrants expire on December 18, 2018. SRA entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay SRA a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $1,116,000 in net proceeds after deducting the placement agent fees of approximately $73,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. In connection with the financing, Wave also issued warrants to SRA to purchase up to 75,201 shares of Wave Class A Common Stock for $0.91 per share. These warrants expire on December 18, 2018. | |
On September 16, 2013 Wave entered into the Development Agreement with EXO5. EXO5 is a company owned by Richard Lee, an experienced software project manager who joined Wave in September 2011 as Project Manager for Cloud Services. Pursuant to the Development Agreement, Wave issued EXO5 372,578 shares of Class A Common Stock valued at $500,000 to acquire a perpetual license for EXO5's Platform. Wave also entered into separate statements of work with EXO5 to develop a SED Management Feature to incorporate with the licensed Platform to allow for the management of SED's in the cloud. The cost associated with the issuance of Class A Common Stock and the development costs, which were paid in cash, have been accounted for in accordance with ASC Topic 350-40 Internal-Use Software and these costs have led to the creation of Wave's hosted cloud platform. Customers can access Wave's cloud platform on a subscription basis. | |
On July 25, 2013, Wave sold 1,204,470 shares of Class A Common Stock at $1.27 per share for gross proceeds of $1,529,677. This financing was completed under the 2011 shelf registration statement. SRA entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay SRA a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $1,408,000 in net proceeds after deducting the placement agent fees of approximately $92,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. In connection with the financing, Wave also issued warrants to SRA to purchase up to 72,268 shares of Wave Class A Common Stock for $1.27 per share. These warrants expire on July 25, 2016. | |
On April 23, 2013, Wave sold 1,585,000 shares of Class A Common Stock at $2.00 per share for gross proceeds of $3,170,000. This financing was completed under the 2011 shelf registration statement. Dawson James Securities, Inc. ("Dawson") entered into a placement agency agreement with Wave in which they agreed to act as placement agent in connection with the offering. Wave agreed to pay Dawson a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $2,920,000 in net proceeds after deducting the placement agent fees of $190,200 and additional legal and other fees associated with the issuance of these securities totaling approximately $60,000. In connection with the financing, Wave also issued warrants to the subscribers to purchase up to 792,500 shares of Wave Class A Common Stock for $2.48 per share. These warrants expire on October 23, 2018. | |
On March 13, 2013, Wave entered into agreements with certain institutional investors for a private placement of 301,205 shares of its Class A Common Stock at a price of $3.32 per share, yielding gross proceeds of $1,000,000. Wave agreed to pay Dawson, the placement agent, a fee equal to 6% of the gross proceeds of this offering. Wave realized approximately $910,000 in net proceeds after deducting the placement agent fees of $60,000 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. Wave also issued warrants to the subscribers to purchase 150,603 shares of Class A Common Stock at an exercise price of $3.32 per share. These warrants expire in October 2018. | |
During the year ended December 31, 2013, Wave received proceeds of $5,352,893 after deducting offering costs of approximately $177,000, in connection with the issuance of 3,811,523 shares of Class A Common Stock in its at the market offerings through MLV. The shares were sold at prices ranging from $0.90 - $2.90 per share. | |
During year ended December 31, 2013, Wave received gross proceeds of $42,039 in connection with the issuance of 12,983 shares of Class A Common Stock upon the exercise of employee stock options. The employee stock options were exercised at $3.24 per share. | |
On December 1, 2013, Wave issued 93,916 shares of Class A Common Stock to Wave employees for $0.9775 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $91,803 from the sale of these shares. | |
On June 1, 2013, Wave issued 132,970 shares of Class A Common Stock to Wave employees for $1.29 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $171,796 from the sale of these shares. | |
2012 Issuances | |
On October 23, 2012, Wave sold 831,188 shares of Class A Common Stock at $4.01 per share for gross proceeds of $3,333,062. This financing was completed under a shelf registration filed with the SEC on June 21, 2011. Wave realized approximately $3,073,000 in net proceeds after deducting the placement agent fees of $199,984 and additional legal and other fees associated with the issuance of these securities totaling approximately $60,000. Wave also issued warrants to the subscribers to purchase 415,594 shares of Class A Common Stock at an exercise price of $3.76 per share. These warrants expire in October 2017. | |
On August 8, 2012, Wave sold 646,956 shares of Class A Common Stock at $2.57 per share for gross proceeds of $1,662,677. This financing was completed under a shelf registration filed with the SEC on June 21, 2011. Wave realized approximately $1,533,000 in net proceeds after deducting the placement agent fees of $99,761 and additional legal and other fees associated with the issuance of these securities totaling approximately $30,000. In connection with the financing, Wave also issued warrants to the subscribers to purchase 323,478 shares of Wave Class A Common Stock for $2.32 per share. These warrants expire on August 8, 2015. Wave also issued a warrant to the placement agent (as part of the fees paid to the placement agent) that will allow the placement agent to acquire 38,817 shares of Wave Class A Common Stock for $2.32 per share. This warrant expires on August 8, 2015. | |
During the year ended December 31, 2012, Wave received proceeds of $9,053,593 after deducting offering costs of approximately $290,000, in connection with the issuance of 1,973,267 shares of Class A Common Stock in its at the market offerings through MLV. The shares were sold at prices ranging from $2.60 - $9.12 per share. | |
During the year ended December 31, 2012, Wave received gross proceeds of $320,500 in connection with the issuance of 145,000 shares of Class A Common Stock upon the exercise of warrants that were granted to investors as part of Wave's 2012 and 2009 financings. The warrants were exercised at prices ranging from $2.20 - $2.32 per share. Additionally, 10,111 shares of Class A Common Stock were issued to SRA upon the partial cashless exercise of warrants that were granted to SRA in its capacity as placement agent as part of Wave's 2009 financings (See Note 13). | |
During the year ended December 31, 2012, Wave received gross proceeds of $79,503 in connection with the issuance of 22,800 shares of Class A Common Stock upon the exercise of employee stock options. The employee stock options were exercised at exercise prices ranging from $2.08 - $7.80 per share. | |
On December 1, 2012, Wave issued 89,571 shares of Class A Common Stock to Wave employees for $2.144 per share, pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $191,862 from the issuance of these shares. | |
On June 1, 2012, Wave issued 139,480 shares of Class A Common Stock to Wave employees for $3.40 per share pursuant to the Wave 2004 Employee Stock Purchase Plan. Wave received proceeds of $474,233 from the issuance of these shares. |
Sharebased_Compensation
Share-based Compensation | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||
Share-based Compensation | Share-based Compensation | ||||||||||||||||||||
Employee Stock Option Plans | |||||||||||||||||||||
1994 Employee Stock Option Plan | |||||||||||||||||||||
In January 1994, Wave adopted the 1994 Employee Stock Option Plan (the "1994 Plan"). The total number of shares of Class A Common Stock reserved for issuance under the 1994 Plan, as amended is 6,000,000 shares. The 1994 Plan expires on July 1, 2024. Under the 1994 Plan, both incentive stock options and non-qualified stock options may be granted to officers, key employees and other persons providing services to Wave. Options granted under the plan generally vest over three years and expire ten years from the date of grant. In January 1994, Wave adopted the Non-Employee Directors Stock Option Plan (the "Directors' Plan"). The total number of shares of Class A Common Stock reserved for issuance under the Directors' Plan, as amended, is 250,000 shares. Under the Directors' Plan, as amended, each director who is not an employee of Wave receives an initial grant of options to purchase 3,750 shares of Class A Common Stock; and an additional annual grant to purchase 3,750 shares on the day immediately following each of the dates on which an incumbent director is reelected. The options granted to non-employee directors vest on the day following the grant and expire ten years from the date of grant. Under all of Wave's stock option plans, options are granted with exercise prices that approximate fair market value at the date of grant. All of Wave's stock option plans and amendments thereto have been approved by shareholder vote. | |||||||||||||||||||||
Wave recognizes compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to the Purchase Plan. Wave estimates the fair value of stock-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statement of operations. | |||||||||||||||||||||
Stock-based compensation expense recognized for the years ended December 31, 2014, 2013 and 2012 was $209,961, $1,694,842 and $4,830,831, respectively. The classification of the cost of share based compensation, in the statement of operations, is consistent with the nature of the services being rendered in exchange for the share based payment. | |||||||||||||||||||||
The following table summarizes the effect of share based compensation in Wave's statement of operations for the years ended December 31: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Cost of Sales | $ | 13,845 | $ | 28,084 | $ | 47,371 | |||||||||||||||
Selling, General & Administrative | 136,525 | 1,250,543 | 3,400,978 | ||||||||||||||||||
Research & Development | 59,591 | 416,215 | 1,382,482 | ||||||||||||||||||
Total | $ | 209,961 | $ | 1,694,842 | $ | 4,830,831 | |||||||||||||||
Wave uses the Black-Scholes-Merton option pricing model to value stock options. The Black-Scholes-Merton model requires the use of employee exercise behavior data and the use of a number of assumptions including volatility of the company's stock price, the weighted-average risk-free interest rate and the weighted-average expected term of the options. As Wave does not pay dividends on its Class A Common Stock, the dividend rate variable in the Black-Scholes-Merton model is zero. | |||||||||||||||||||||
The following values for the indicated variables were used to value options granted during the years ended December 31: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Stock Option | Stock Purchase | Stock Option | Stock Purchase | Stock Option | Stock Purchase | ||||||||||||||||
Plans | Plan | Plans | Plan | Plans | Plan | ||||||||||||||||
Expected Term | 4.1 Years | 6 Months | 4.5 Years | 6 Months | 4.9 Years | 6 Months | |||||||||||||||
Risk-free Rate—range | 1.41% - 1.80% | 0.06% - 0.08% | 0.65% - 1.68% | 0.08% - 0.10% | 0.57% - 1.20% | 0.12% - 0.14% | |||||||||||||||
Risk-free Rate—wt. avg. | 1.57% | 7.00% | 1.09% | 0.10% | 0.85% | 0.13% | |||||||||||||||
Expected Volatility—range | 81.8% - 87.4% | 76.5% - 89.1% | 88.4% - 98.1% | 89.6% - 90.8% | 91.8% - 96.0% | 62.6% - 95.6% | |||||||||||||||
Expected Volatility—wt. avg. | 74.60% | 84.20% | 93.90% | 90.50% | 92.50% | 75.50% | |||||||||||||||
Dividend Yield | 0% | 0% | 0% | 0% | 0% | 0% | |||||||||||||||
The volatility assumptions are based on the historical daily price data of Wave's stock over a period equivalent to the weighted average expected term of the options. Management did not identify any factors during that period which were unusual and which would distort the volatility figure if used to estimate future volatility. | |||||||||||||||||||||
The risk-free interest rate assumption is based upon the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the option granted. | |||||||||||||||||||||
The expected term of employee stock options represents the weighted average period that the stock options are expected to remain outstanding. For Wave's stock option plans, the expected term is based upon an analysis of the historical behavior of option holders during the period from January 1, 2010 to December 31, 2014. Management believes historical data is representative of future exercise behavior. For Wave's Employee Stock Purchase Plan, the expected term of six months, is the length of each purchase period, pursuant to the plan. | |||||||||||||||||||||
As stock-based compensation expense recognized in the consolidated statement of operations is based on awards ultimately expected to vest, stock-based compensation expense reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience. | |||||||||||||||||||||
A summary of option activity for all Wave option plans through December 31, 2014 follows: | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Number of | Weighted | Number of | Weighted | Number of | Weighted | ||||||||||||||||
Shares | Average | Shares | Average | Shares | Average | ||||||||||||||||
Exercise | Exercise | Exercise | |||||||||||||||||||
Price | Price | Price | |||||||||||||||||||
Balance at beginning of year | 3,383,554 | $ | 7.78 | 3,341,575 | $ | 9.51 | 2,936,392 | $ | 10.2 | ||||||||||||
Granted | 1,488,300 | 1.19 | 950,222 | 2.69 | 732,081 | 8.2 | |||||||||||||||
Forfeited | (593,476 | ) | 1.73 | (495,396 | ) | 7.63 | (123,875 | ) | 10.88 | ||||||||||||
Expired | (933,496 | ) | 10.04 | (399,864 | ) | 10.55 | (180,223 | ) | 15.2 | ||||||||||||
Exercised | — | — | (12,983 | ) | 3.24 | (22,800 | ) | 3.48 | |||||||||||||
Balance at end of year | 3,344,882 | 5.2 | 3,383,554 | 7.78 | 3,341,575 | 9.51 | |||||||||||||||
Exercisable at end of year | 1,833,719 | 8.04 | 2,304,154 | $ | 8.94 | 2,129,510 | $ | 8.68 | |||||||||||||
Additional shares available for grant at end of year | 2,190,092 | 2,371,405 | 1,146,683 | ||||||||||||||||||
The weighted average grant date fair value of options granted during the years ended December 31, 2014, 2013 and 2012 was $0.61, $1.89 and $5.72, respectively. | |||||||||||||||||||||
The weighted average remaining contractual term for options outstanding and options exercisable at December 31, 2014 were 6.8 and 4.9 years, respectively. | |||||||||||||||||||||
As of December 31, 2014, unrecognized stock-based compensation related to stock options was approximately $945,000. At December 31, 2014, the weighted average period this cost is expected to be expensed over is 1.4 years. The total fair value of shares that vested during the years ended December 31, 2014, 2013 and 2012 was approximately $2,402,000, $4,405,000 and $3,996,000, respectively. | |||||||||||||||||||||
As of December 31, 2014, the intrinsic value of outstanding, vested and currently exercisable share options was $0. | |||||||||||||||||||||
The following table summarizes information about stock options outstanding under the Wave stock options plans as of December 31, 2014: | |||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||
Exercise Price Range | Number | Weighted | Weighted | Number | Weighted | ||||||||||||||||
Outstanding | Average | Average | Exercisable | Average | |||||||||||||||||
Remaining | Exercise | Exercise | |||||||||||||||||||
Contractual Life | Price | Price | |||||||||||||||||||
$0.25 - $3.50 | 1,707,528 | 8.3 | $ | 1.47 | 454,541 | $ | 2.74 | ||||||||||||||
$3.51 - $7.00 | 353,806 | 7.2 | $ | 3.97 | 176,448 | $ | 4.12 | ||||||||||||||
$7.01 - $8.00 | 482,654 | 3.4 | $ | 7.69 | 482,654 | $ | 7.69 | ||||||||||||||
$8.01 - $12.00 | 483,055 | 5.7 | $ | 9.13 | 402,237 | $ | 9.19 | ||||||||||||||
$12.01 - $18.00 | 81,306 | 2.9 | $ | 13.19 | 81,306 | $ | 13.19 | ||||||||||||||
$18.01 - $20.00 | 236,533 | 5.6 | $ | 18.36 | 236,533 | $ | 18.36 | ||||||||||||||
3,344,882 | 1,833,719 | ||||||||||||||||||||
Employee Stock Purchase Plan | |||||||||||||||||||||
In November 2004, the Board of Directors adopted the Wave Systems Corp. 2004 Employee Stock Purchase Plan. The Purchase Plan was ratified by a shareholder vote at Wave's 2005 annual shareholder meeting on May 23, 2005. Under the terms of the Purchase Plan, employees may elect to have withheld, up to 15% of their base earnings to purchase these shares during each offering period, up to a maximum of $25,000 in market value of Wave's Class A Common Stock. Offering periods commence on June 1st and December 1st and are for a period of six months. The purchase price under the Purchase Plan is 85% of the lesser of the market price on the beginning or the ending of the offering period. | |||||||||||||||||||||
For the year ended December 31, 2014, employees purchased 172,660 shares of Wave Class A Common Stock at an average share price of $0.92 per share, for an aggregate of $158,334 in proceeds to Wave. For the year ended December 31, 2013, employees purchased 226,886 shares of Wave Class A Common Stock at an average share price of $1.16 per share, for an aggregate of $263,599 in proceeds to Wave. For the year ended December 31, 2012, employees purchased 229,052 shares of Wave Class A Common Stock at an average share price of $2.92 per share, for an aggregate of $666,095 in proceeds to Wave. |
Warrants
Warrants | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ||||||||||||||||
Warrants | Warrants | |||||||||||||||
A summary of warrants outstanding at December 31, 2014, follows: | ||||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||
Exercise Price | Number of | Weighted | Weighted | Number of | Weighted | |||||||||||
Shares | Average | Average | Shares | Average | ||||||||||||
Remaining | Exercise | Exercise | ||||||||||||||
Contractual Life | Price | Price | ||||||||||||||
(in years) | ||||||||||||||||
$0.25 - $2.00 | 2,730,454 | 4.2 | $ | 1.68 | 2,730,454 | $ | 1.68 | |||||||||
$2.01 - $4.00 | 1,708,492 | 2.9 | $ | 2.83 | 1,708,492 | $ | 2.83 | |||||||||
$4.01 - $4.62 | 117,934 | 0.1 | $ | 4.62 | 117,934 | $ | 4.62 | |||||||||
4,556,880 | 3.6 | $ | 2.19 | 4,556,880 | $ | 2.19 | ||||||||||
Gain_on_Sale_of_eSign
Gain on Sale of eSign | 12 Months Ended |
Dec. 31, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Gain on Sale of eSign | Gain on Sale of eSign |
On October 15, 2014, Wave entered into an Asset Purchase Agreement (the “Agreement”) with DocMagic, Inc. (“DocMagic”) to sell the eSignSystems, a product line of Wave Systems Corp., to DocMagic for approximately $1,214,000 (the “Transaction”). The Transaction closed on October 16, 2014. Wave recorded a gain on the sale of $1,304,579 which consisted of the proceeds received of $1,214,082, adjusted for the reversal of deferred revenue for which Wave was no longer obligated to fulfill and accounts receivable balances that are payable to DocMagic per the terms of the Agreement. |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||
Income Taxes | Income Taxes | |||||||||||
Loss before income tax expense for the United States of America and the State of Israel for the years ended December 31, 2014, 2013 and 2012 consisted of: | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Loss before income tax expense: | ||||||||||||
United States of America | $ | (12,350,762 | ) | $ | (15,416,885 | ) | $ | (23,482,045 | ) | |||
State of Israel | (517,836 | ) | (4,896,769 | ) | (10,468,470 | ) | ||||||
$ | (12,868,598 | ) | $ | (20,313,654 | ) | $ | (33,950,515 | ) | ||||
Income tax expense attributable to income from continuing operations for the years ended December 31, 2014, 2013 and 2012 consisted of: | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Current income tax expense: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | 12,000 | 10,610 | 12,033 | |||||||||
Foreign | — | — | — | |||||||||
12,000 | 10,610 | 12,033 | ||||||||||
Deferred income tax expense: | ||||||||||||
Federal | — | — | — | |||||||||
State | — | — | — | |||||||||
Foreign | — | — | — | |||||||||
— | — | — | ||||||||||
Total income tax expense | $ | 12,000 | $ | 10,610 | $ | 12,033 | ||||||
The following table summarizes the significant differences between the United States federal statutory tax rate and the Company's effective tax rate for financial statement reporting purposes: | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Statutory tax rate | 34 | % | 34 | % | 34 | % | ||||||
Stock-based compensation on ISO's | — | (4 | ) | (7 | ) | |||||||
State tax, net of federal benefit | — | — | — | |||||||||
Change in valuation allowance | (34 | ) | (30 | ) | (27 | ) | ||||||
Total | — | % | — | % | — | % | ||||||
The tax effects of temporary differences that give rise to the deferred tax asset at December 31, 2014 and 2013 are as follows: | ||||||||||||
2014 | 2013 | |||||||||||
Deferred tax assets: | ||||||||||||
Net operating loss carryforwards | $ | 110,747,000 | $ | 106,210,000 | ||||||||
Accrued expenses | 1,878,000 | 2,463,000 | ||||||||||
Intangibles | 86,000 | 289,000 | ||||||||||
Reserves | — | 846,000 | ||||||||||
Depreciation | 211,000 | 159,000 | ||||||||||
Net deferred tax assets | 112,922,000 | 109,967,000 | ||||||||||
Less valuation allowance | (112,553,000 | ) | (109,565,000 | ) | ||||||||
Deferred tax assets | 369,000 | 402,000 | ||||||||||
Deferred tax liabilities: | ||||||||||||
Acquired intangible assets | (369,000 | ) | (402,000 | ) | ||||||||
Net deferred tax assets (liabilities) | $ | — | $ | — | ||||||||
The valuation allowance increased by approximately $2,988,000 during the year ended December 31, 2014 and increased approximately $5,100,000 during the year ended December 31, 2013. | ||||||||||||
Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets and liabilities. At December 31, 2014 and 2013, Wave's historical operating results, its cumulative loss positions and uncertainty surrounding its forecasts, led management to conclude that a valuation allowance of $112,553,000 and $109,565,000, respectively, is needed to offset its deferred tax assets. Subsequently reported tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2014 will be allocated as follows: $111,813,000 to continuing operations and $740,000 to additional paid-in-capital for amounts attributable to exercises of employee stock options. | ||||||||||||
Wave has federal and state net operating loss carryforwards of approximately $316,802,000, which expire beginning in 2015 through 2034 and include approximately $8,074,000 of net operating loss carryforwards of Safend, Inc., a wholly owned US-based subsidiary of Safend. Pursuant to Section 382 of the Internal Revenue Code, the annual utilization of Wave's net operating and capital loss carryforwards may be substantially limited if a cumulative change in ownership of more than 50% occurs within any three-year period. Wave has not determined whether there have been such cumulative changes in ownership or the impact on the utilization of the loss carryforwards if such changes have occurred. However, in considering Section 382 of the Internal Revenue Code, Wave believes that it is likely that such a change in ownership has occurred thus raising the likelihood that such net operating and capital loss carryforwards are subject to annual limitations. In addition, the Company maintains approximately $16,000,000 of operating loss carryforwards associated with Safend, Ltd. which may be carried forward indefinitely. | ||||||||||||
The Company had no gross unrecognized tax benefits at December 31, 2014, 2013 and 2012. | ||||||||||||
The Company's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company files United States Federal and state income tax returns. In general, the statute of limitations with respect to the Company's United States Federal income taxes has expired for years prior to 2009, and the relevant state statutes vary. However, preceding years remain open to examination by United States Federal and state taxing authorities to the extent of future utilization of net operating losses and capital losses generated in each preceding year. The Company does not anticipate that the total unrecognized tax benefits will change significantly prior to December 31, 2014. As described above, utilization of the Company's loss carryforwards may be limited pursuant to Section 382 of the Internal Revenue Code. Any limitation may result in expiration of a portion of the net operating and capital loss carryforwards before utilization. Until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | Commitments and Contingencies | |||
Royalty Liability | ||||
Safend is required to pay back grants received from the Israeli government through the Office of the Chief Scientist ("OCS") for the financing of a portion of its research and development expenditures in Israel. Safend's repayments are based on a royalty rate of 3.5% of total Safend revenues and there is no termination date for the payments. Interest is accrued based on the 12 month LIBOR rate at the time of each individual grant and remains fixed at that rate until the grant is repaid. At December 31, 2014 and 2013, the book value of the liability amounted to $5,157,306 and $4,673,629, respectively. The actual amount owed to the OCS is approximately $6,200,000 at December 31, 2014 and $6,235,000 at December 31, 2013. The difference between the amount owed at December 31, 2014 and 2013 and the book value relates to the remaining accretion of the fair value discount recorded when Safend was acquired. During the years ended December 31, 2014 and 2013 approximately $193,623 and $183,000, respectively, was repaid to the OCS while approximately $0 and $80,000, respectively, was received as additional grants from the OCS. During the years ended December 31, 2014 and 2013, approximately $97,300 and $81,000, respectively, of accretion is included in the net interest expense on the consolidated statements of operations. During the year ended December 31, 2014, approximately $580,000 was recorded as interest expense relating to the LIBOR component of the arrangement. The $580,000 represents the cumulative interest incurred on the grants to correct an out of period error. We assessed the materiality of the error on prior periods' financial statements and concluded that the error was not material to any of our prior period annual or current and prior period interim financial statements. We elected to correct the error in the three-month period ended December 31, 2014 by increasing interest expense by $580,000 and increasing the royalty liability on the consolidated balance sheet by the same amount. For the three and twelve month periods ended December 31, 2014, loss per basic and diluted share decreased by $0.01 as a result of the correction. | ||||
Operating Leases | ||||
Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2014 are as follows: | ||||
2015 | $ | 1,091,000 | ||
2016 | 423,000 | |||
2017 | 13,000 | |||
2018 | 2,000 | |||
Total minimum lease payments | $ | 1,529,000 | ||
Rent expense for the years ended December 31, 2014, 2013 and 2012 amounted to approximately $1,142,000, $1,123,000 and $1,143,000, respectively. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
Steven Sprague, Wave's former President and Chief Executive Officer, served as a member of the Board of Directors through June 2014. Steven Sprague earned approximately $45,000 in board fees during the twelve-months ended December 31, 2014. | |
Peter Sprague, the father of Steven Sprague, was paid a salary of $127,197, $134,200, and $134,200 for the years ended December 31, 2014, 2013, and 2012, respectively. Peter Sprague earned bonuses of $0, $0 and $30,000 for the years ended December 31, 2014, 2013 and 2012, respectively. | |
Michael Sprague, the brother of Steven Sprague and the son of Peter Sprague, was terminated by the Company in March 2014. He was paid a salary of $39,494, $189,300 and $189,300 for the years ended December 31, 2014, 2013, and 2012, respectively. Michael Sprague earned bonuses of $0, $0 and $45,000 for the years ended December 31, 2014, 2013 and 2012, respectively. | |
On September 16, 2013 Wave entered into a Software Development and License Agreement ("the Development Agreement") with EXO5, LLC ("EXO5"). EXO5 is a company owned by Richard Lee, an experienced software project manager who joined Wave in September 2011 as Project Manager for Cloud Services. Pursuant to the Development Agreement, Wave issued EXO5 372,578 shares of Class A Common Stock valued at $500,000 to acquire a perpetual license for EXO5's Cloud Application Platform ("the Platform"). During the year ended December 31, 2014, Wave incurred costs of $417,000 associated with additional maintenance work performed by EXO5 on the Platform. |
Defined_Contribution_Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
Defined Contribution Plan | Defined Contribution Plan |
On January 1, 1995, Wave adopted the Wave Systems Corp. 401(k) Savings and Investment Plan, a defined contribution plan, to which substantially all employees can contribute. Employees of Wave become eligible immediately on employment. Wave has the option to make discretionary matching contributions; no contributions were made in 2014, 2013 or 2012. |
Disclosures_about_the_Fair_Val
Disclosures about the Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | |
Disclosures about the Fair Value of Financial Instruments | Disclosures about the Fair Value of Financial Instruments |
As of December 31, 2014 and 2013, Wave's financial assets that are measured at fair value on a recurring basis are comprised of overnight money market fund investments. Wave invests excess cash from its operating cash accounts in overnight money market funds and reflects these amounts (approximately $1,188,000 and $1,417,000 at December 31, 2014 and 2013, respectively) within cash and cash equivalents on the consolidated balance sheet using quoted prices in active markets for identical assets (Level 1). | |
Financial instruments not measured or recorded at fair value consist of accounts receivable, collateralized receivables, accounts payable and secured borrowings. The estimated fair value of accounts receivable, collateralized receivables, accounts payable and secured borrowings approximates their carrying value. | |
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Segment_Reporting
Segment Reporting | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||
Segment Reporting | Segment Reporting | |||||||||||||||
Segments are defined by authoritative guidance as components of a company in which separate financial information is available and is evaluated by the chief operating decision maker (CODM), or a decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is our chief executive officer. | ||||||||||||||||
In the 2013 fiscal year, the Company previously reported two operating segments: EMBASSY® digital security products and services and Safend endpoint data loss security products and services. The data loss security products and services were historically segmented as a result of the acquisition of Safend in September 2011 and the way in which the previous CODM viewed the business. | ||||||||||||||||
During the 2014 fiscal year, our CODM decided that our product offerings constitute a single business activity and that our financial results should be evaluated on that basis. Our CODM determined that a functional management approach with centralized roles and responsibilities would be best to enable the Company to efficiently scale and deliver its solutions to its customers. Our CODM assembled an executive team with specific business functional responsibility to move further towards an integrated and scalable operation and drive our business as an integrated offering. In the fourth quarter of the 2014 fiscal yaer our CODM discontinued our historical segmented reporting as a management tool. The Company presents a single segment for purposes of financial reporting and prepared its consolidated financial statements upon that basis. | ||||||||||||||||
The following table details Wave's sales by geographic area for the years ended December 31, 2014, 2013 and 2012. Geographic area is based on the location of where the products were delivered or services rendered. | ||||||||||||||||
United States | Europe | Asia | Total | |||||||||||||
of America | ||||||||||||||||
2014 | ||||||||||||||||
Wave products and services | $ | 11,251,506 | $ | 4,381,551 | $ | 1,337,777 | $ | 16,970,834 | ||||||||
% of Total | 66 | % | 26 | % | 8 | % | 100 | % | ||||||||
2013 | ||||||||||||||||
Wave products and services | $ | 16,267,661 | $ | 6,364,707 | $ | 1,768,484 | $ | 24,400,852 | ||||||||
% of Total | 67 | % | 26 | % | 7 | % | 100 | % | ||||||||
2012 | ||||||||||||||||
Wave products and services | $ | 21,187,703 | $ | 6,549,013 | $ | 1,105,797 | $ | 28,842,513 | ||||||||
% of Total | 73 | % | 23 | % | 4 | % | 100 | % | ||||||||
Approximately 90% of all long-lived assets of Wave are located within the United States of America and approximately 10% are located in the State of Israel. |
Selected_Quarterly_Financial_D
Selected Quarterly Financial Data (unaudited) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||
Selected Quarterly Financial Data (unaudited) | Selected Quarterly Financial Data (unaudited) | |||||||||||||||
Quarter-ended | ||||||||||||||||
December 31, | September 30, | June 30, | March 31, | |||||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||||
Revenues | $ | 2,866,371 | $ | 4,332,104 | $ | 4,439,820 | $ | 5,332,539 | ||||||||
Cost of net revenues | 303,601 | 333,828 | 338,519 | 312,828 | ||||||||||||
Loss from operations | (4,366,992 | ) | (2,077,621 | ) | (3,754,279 | ) | (3,246,930 | ) | ||||||||
Net loss | (3,685,704 | ) | (2,105,859 | ) | (3,795,530 | ) | (3,293,505 | ) | ||||||||
Net loss per common share—basic and diluted | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.09 | ) | ||||
Quarter-ended | ||||||||||||||||
December 31, | September 30, | June 30, | March 31, | |||||||||||||
2013 | 2013 | 2013 | 2013 | |||||||||||||
Revenues | $ | 5,613,559 | $ | 6,251,325 | $ | 6,742,242 | $ | 5,793,726 | ||||||||
Cost of net revenues | 313,310 | 471,200 | 579,466 | 2,332,960 | ||||||||||||
Loss from operations | (3,611,657 | ) | (2,895,031 | ) | (3,432,071 | ) | (10,157,219 | ) | ||||||||
Net loss | (3,676,389 | ) | (2,943,823 | ) | (3,490,297 | ) | (10,213,755 | ) | ||||||||
Net loss per common share—basic and diluted | $ | (0.11 | ) | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.39 | ) |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
On January 15, 2015, Wave received notification from the NASDAQ Stock Market indicating that its common stock is subject to potential delisting from the NASDAQ Capital Market because for a period of 30 consecutive business days, the bid price of Wave's common stock closed below the minimum $1.00 per share requirement for continued inclusion under the Bid Price Rule. The NASDAQ notice indicated that, in accordance with NASDAQ Marketplace Rule 5810(c)(3)(A), Wave will be provided 180 calendar days, or until July 14, 2015, to regain compliance. If, at anytime before July 14, 2015, the bid price of Wave's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, NASDAQ staff will provide written notification that it has achieved compliance with the Bid Price Rule. If Wave fails to regain compliance with the Bid Price Rule before July 14, 2015 but meet all of the other applicable standards for initial listing on the NASDAQ Capital Market with the exception of the minimum bid price, then Wave may be eligible to have an additional 180 calendar days, or until January 10, 2016, to regain compliance with the Bid Price Rule. | |
On February 25, 2015, Wave named R. Stephen Cheheyl to its Board of Directors. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | (a) Basis of Consolidation |
The consolidated financial statements include the financial statements of Wave, Wave Systems Holdings, Inc., a wholly owned subsidiary, Safend, Ltd. (and its wholly owned subsidiary, Safend, Inc., collectively referred to as "Safend"), a wholly owned subsidiary and Wavexpress, Inc. a majority-owned subsidiary that is dormant. All intercompany accounts and transactions have been eliminated in consolidation. | |
Foreign Currency Translation | (b) Foreign Currency Translation |
The functional currency of Safend is the U.S dollar. Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Foreign currency transaction gains or losses are credited or charged to the consolidated statements of operations as incurred as a component of other income (expense), net. | |
Use of Estimates | (c) Use of Estimates |
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to, depreciation and amortization, revenue recognition, accounts receivable reserves, valuation of long-lived and intangible assets, contingencies and share-based compensation. Actual results could differ from those estimates. | |
Cash and Cash Equivalents | (d) Cash and Cash Equivalents |
Wave considers all highly liquid instruments with an original or remaining maturity of three months or less to be cash equivalents. | |
Accounts Receivable and Allowance For Doubtful Accounts | (e) Accounts Receivable and Allowance For Doubtful Accounts |
Included in accounts receivable at December 31, 2014 and 2013 are unbilled amounts totaling $164,834 and $125,497, respectively. | |
The determination of the allowance for doubtful accounts is based on management's estimate of uncollectible accounts receivable. Management records specific reserves for receivable balances that are considered high risk of non-collectability due to known facts regarding the customer. | |
Accounting for Transfers of Financial Assets | (f) Accounting for Transfers of Financial Assets |
Wave derecognizes financial assets, specifically accounts receivable, when control has been surrendered in compliance with ASC Topic 860, Transfers and Servicing. Transfers of accounts receivable that meet the requirements of ASC 860 for sale accounting treatment are removed from the balance sheet and gains or losses on the sale are recognized. If the conditions for sale accounting treatment are not met, or are no longer met, accounts receivable transferred are classified as collateralized receivables in the consolidated balance sheets and cash received from these transactions is classified as secured borrowings. All transfers of assets are accounted for as secured borrowings. Transaction costs associated with secured borrowings, if any, are treated as borrowing costs and recognized in interest expense. | |
Concentrations | (g) Concentrations |
Sales to Wave's largest customer in 2014, 2013 and 2012, Dell, Inc., were approximately 32%, 46% and 55% of revenue, respectively. Accounts receivable at December 31, 2014, 2013 and 2012 included receivables from Dell, Inc. and its affiliates of $134,621, $1,025,377 and $1,187,398, respectively. At December 31, 2014 and 2013, $0 and $1,683,188, respectively, of Dell receivables are classified as pledged receivables on the consolidated balance sheet. | |
Property and Equipment | (h) Property and Equipment |
Property and equipment, including purchased computer software, are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets which range from between 3 years to 5 years. Amortization of leasehold improvements is computed using the shorter of the useful life or remaining lease term which range from between 3 years and 4 years. | |
Capitalized internal-use software development costs | (i) Capitalized internal-use software development costs |
The Company follows the provisions of ASC Topic 350-40, Intangibles Goodwill and Other—Internal Use Software. ASC Topic 350-40 provides guidance for determining whether computer software is internal-use software and also provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The capitalized costs as of December 31, 2014 and 2013 are related to Wave's cloud platform that is hosted by the Company and accessed by its clients on a subscription basis. The Company expenses all costs incurred during the preliminary project stage of development and capitalizes the costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements add additional functionality to the software. Costs incurred to improve and support products after they become available are charged to expense as incurred. The Company records amortization of the software on a straight-line basis over five, which is the estimated useful life of the software. At each balance sheet date, management evaluates the unamortized capitalized software costs for potential impairment by comparing the balance to the net realizable value of the products. | |
Income Taxes | (j) Income Taxes |
Wave accounts for income taxes under the asset and liability method. As such, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At December 31, 2014 and 2013, a full valuation allowance has been recorded against the gross deferred tax asset since management believes that, after considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, it is more likely than not that these assets will not be realized. Wave classifies any interest and penalties related to uncertain tax positions as components of the income tax provision. | |
Share-based Payments | (k) Share-based Compensation |
Wave recognizes compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to the Employee Stock Purchase Plan. Share-based compensation expense recognized is based on the value of the portion of share-based payment awards that is ultimately expected to vest and has been reduced for estimated forfeitures. Wave determines the fair value of share-based payment awards on the date of the grant using the Black-Scholes option pricing method which is affected by Wave's stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the estimated term of the award and Wave's estimated stock price volatility. | |
Research and Development and Software Development Costs | (l) Research and Development and Software Development Costs |
Research and development costs are expensed as incurred. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products. | |
Loss Per Share | (m) Loss Per Share |
Basic net loss per common share has been calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is also computed using the weighted average number of common shares and includes dilutive potential common shares outstanding. Dilutive potential common shares consist primarily of employee stock options and stock warrants. Diluted net loss per share is equal to basic net loss per share and is therefore not presented separately in the financial statements. The weighted average number of potential common shares that would have been included in diluted loss per share had their effect not been anti-dilutive for each of the years ended December 31, 2014, 2013 and 2012 were approximately 144,000 shares, 99,000 shares and 615,000 shares, respectively. Employee stock options and other stock warrants to purchase a weighted average of approximately 6,104,000, 5,504,000 and 3,669,000 shares were outstanding as of December 31, 2014, 2013 and 2012 respectively, but are not included in the computation of diluted loss per share because their exercise price was greater than the average share price of Wave's common shares. | |
Valuation of Long Lived Assets | (n) Valuation of Long Lived Assets |
We review purchased intangible assets with finite lives for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Recoverability of asset groups is assessed based on the estimated undiscounted future cash flows expected to be generated by the asset group, including its ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. | |
Goodwill | (o) Goodwill |
We review goodwill for impairment annually and whenever events or changes in circumstances indicate the fair value of a reporting unit is more likely than not below its carrying value. If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss. We perform a quantitative test and determine the fair value of the reporting unit using the income approach. Under the income approach, we calculate the fair value of the reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. The reporting unit’s fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss. | |
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates and future economic and market conditions. We base our fair value estimates on assumptions we believe to be reasonable but they are unpredictable and inherently uncertain. Actual future results may differ from those estimates. | |
We will continue to evaluate goodwill on an annual basis as of September 30 and whenever events or changes in circumstances, such as significant adverse changes in business climate or operating results or changes in management’s business strategy, indicate that there may be a potential indicator of impairment. | |
Revenue Recognition | (p) Revenue Recognition |
Wave's business model targets revenues from various sources including software products and development contracts. Many of these sales arrangements include multiple-elements and/or require significant modification or customization of Wave's software. | |
Wave recognizes revenue when 1) persuasive evidence of an arrangement exists, 2) delivery has occurred or services have been rendered, 3) fees are fixed or determinable and 4) collectability is reasonably assured. If we determine that any one of the four criteria is not met, we will defer recognition of revenue until all the criteria are met. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue. | |
Licensing and Maintenance | |
Wave receives revenue from licensing its software through distribution arrangements with its OEM partners, license upgrade agreements with end users of the products, software development and other services including maintenance. Wave applies software revenue recognition guidance to all transactions except those where no software is involved. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured. Persuasive evidence is generally a binding purchase order or license agreement. Delivery occurs when product is shipped for its OEM distribution arrangements, or delivered via a license key for our license upgrade agreements. | |
Wave enters into perpetual software license agreements through direct sales to customers and indirect sales through its OEM partners, distributors and resellers. Wave has defined its two classes of end user customers: large customers, whose orders are in excess of 5,000 licenses and small customers, whose orders are less than 5,000 licenses. These license upgrade agreements generally include a maintenance component. For arrangements with multiple elements, including software licenses, maintenance and/or services, revenue is allocated and deferred in amounts equivalent to the vendor specific objective evidence ("VSOE") of fair value for the undelivered elements and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as license revenue. VSOE of fair value is based upon the price for which the undelivered element is sold separately. | |
During the year ended December 31, 2014, Wave further stratified the VSOE of fair value of maintenance analysis to align it with current sales trends with respect to product mix and maintenance terms. The following represents the resulting updates to VSOE of fair value of maintenance as a result of such further stratification. | |
·Wave products: | |
·VSOE of fair value of maintenance is only applied to bundled license and maintenance arrangements with maintenance terms of one year and less than 5,000 licenses. | |
Wave has VSOE of fair value of maintenance for its small class of customers based on independent one-year maintenance renewals for its EMBASSY Remote Administration Server (“ERAS”) for Self Encrypting Drives (“SED”) product and its Protector product. As a result, for the ERAS SED and Protector small customer class licenses with maintenance bundled, Wave allocates the arrangement consideration to the elements in multi-element arrangements using the residual method. Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee for perpetual licenses is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met. | |
When VSOE of fair value for the undelivered elements does not exist, as is the case for Wave’s maintenance for all products other than ERAS SED and Protector, large customer class ERAS SED and Protector orders, and small customer class ERAS SED and Protector orders when maintenance terms are in excess of one year, the entire arrangement fee is recognized ratably over the performance period as licensing and maintenance revenue. | |
Wave’s deferred revenue consists of the unamortized maintenance for sales to its small class of customers and bundled license and maintenance arrangements where VSOE does not exist. | |
Licensing and maintenance—cost of net revenues includes customer support personnel costs, foreign tax withholdings, amortization expense of the developed technology intangible asset, costs associated with providing consulting services and related share-based compensation expense. | |
Services | |
Revenue from time and material service contracts is recognized as the services are provided. Revenue from fixed price, long-term service or development contracts is recognized using the percentage of completion method or the completed contract method. The determination between use of the completed contract method and the percentage of completion method is based on our ability to reasonably estimate the costs to fulfill the contract. The Company measures the percentage of completion by reference to the proportion of contract hours incurred for work performed to date to the estimated total contract hours expected to be incurred. Losses on fixed price contracts are recognized during the period in which such losses are identified. | |
Services—cost of net revenues includes non-recurring time and materials costs incurred in connection with fixed price contracts. | |
Immaterial Correction of an Error | (q) Immaterial Correction of an Error |
During the third quarter of 2014, we identified an error in our accounting for share-based compensation recorded in fiscal years 2013, 2012 and 2011and through the six-months ended June 30, 2014. We assessed the materiality of the error on prior periods’ financial statements and concluded that the error was not material to any of our prior period annual or current and prior period interim financial statements. We elected to correct the error in the three-month period ended September 30, 2014 by decreasing operating expenses by $820,000 and decreasing capital in excess of par value on the consolidated balance sheet by the same amount. For the three and nine month periods ended September 30, 2014, loss per basic and diluted share decreased by $0.02 as a result of the correction. | |
During the fourth quarter of 2014, we identified an error in our accounting for the royalty liability for grants received from the Israeli government through the Office of the Chief Scientist ("OCS") for fiscal years 2013 and 2012 and through the nine months ended September 30, 2014. We assessed the materiality of the error on prior periods' financial statements and concluded that the error was not material to any of our prior period annual or current and prior period interim financial statements. We elected to correct the error in the three-month period ended December 31, 2014 by increasing interest expense by $580,000 and increasing the royalty liability on the consolidated balance sheet by the same amount. For the three and twelve month periods ended December 31, 2014, loss per basic and diluted share decreased by $0.01as a result of the correction. | |
Recent Adopted Accounting Pronouncements | (r) Recently Adopted Accounting Pronouncements |
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements - Going Concern, which amends the disclosures of uncertainties about an entity's ability to continue as a going concern. The amendments provide guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce the diversity in the timing and content of footnote disclosures. The Company is required to adopt the amendments in the first quarter of 2017. Early adoption is permitted. The Company is currently evaluating the impact of these amendments on its Consolidated Financial Statements. | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (Topic 606), which amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is required to adopt the amendments in the first quarter of 2017. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact of these amendments and the transition alternatives on its Consolidated Financial Statements. | |
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Components of an Entity, which updates the definition of discontinued operations under GAAP. Going forward, only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. Previously, a component of an entity that is a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. Additionally, the condition that the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction has been removed. The effective date for the revised standard is for applicable transactions that occur within annual periods beginning on or after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company adopted this standard in the third quarter of 2014. |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Schedule of property and equipment | Property and equipment as of December 31 consisted of the following: | |||||||
2014 | 2013 | |||||||
Computer equipment | $ | 2,729,409 | $ | 4,391,637 | ||||
Furniture, fixtures and improvements | 812,977 | 812,977 | ||||||
Computer software | 751,248 | 2,725,290 | ||||||
4,293,634 | 7,929,904 | |||||||
Less: Accumulated depreciation and amortization | (3,881,879 | ) | (7,333,084 | ) | ||||
Total | $ | 411,755 | $ | 596,820 | ||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||
Schedule of changes in the carrying amount of goodwill | The following schedule presents the changes in the carrying amount of goodwill associated with the Safend reporting unit during the years ended December 31, 2014 and 2013: | |||||||||||||||||
Balance as of December 31, 2012 | $ | 4,038,000 | ||||||||||||||||
Impairment loss | (2,590,000 | ) | ||||||||||||||||
Balance as of December 31, 2013 | 1,448,000 | |||||||||||||||||
Impairment loss | — | |||||||||||||||||
Balance as of December 31, 2014 | $ | 1,448,000 | ||||||||||||||||
Schedule of the details of intangible assets | The following schedule presents the change in the carrying value of intangible assets as of December 31, 2014 and 2013: | |||||||||||||||||
December 31, 2014 | ||||||||||||||||||
Intangible Asset | Gross | Accumulated | Accumulated | Net | Weighted | |||||||||||||
Carrying | Amortization | Impairment | Average | |||||||||||||||
Amount | Loss | Remaining | ||||||||||||||||
Useful Life | ||||||||||||||||||
(in years) | ||||||||||||||||||
Developed Technology | $ | 6,426,000 | $ | (1,292,297 | ) | $ | (5,038,100 | ) | $ | 95,603 | 3.8 | |||||||
Customer Relationships | 3,972,000 | (889,327 | ) | (1,786,673 | ) | 1,296,000 | 6.8 | |||||||||||
Internal-use software | 726,000 | (182,710 | ) | — | 543,290 | 3.8 | ||||||||||||
Acquired Patents | 1,100,000 | (1,026,666 | ) | — | 73,334 | 0.4 | ||||||||||||
$ | 12,224,000 | $ | (3,391,000 | ) | $ | (6,824,773 | ) | $ | 2,008,227 | |||||||||
31-Dec-13 | ||||||||||||||||||
Intangible Asset | Gross | Accumulated | Accumulated | Net | Weighted | |||||||||||||
Carrying | Amortization | Impairment | Average | |||||||||||||||
Amount | Loss | Remaining | ||||||||||||||||
Useful Life | ||||||||||||||||||
(in years) | ||||||||||||||||||
Developed Technology | $ | 6,426,000 | $ | (1,266,803 | ) | $ | (5,038,100 | ) | $ | 121,097 | 4.8 | |||||||
Customer Relationships | 3,972,000 | (697,327 | ) | (1,786,673 | ) | 1,488,000 | 7.8 | |||||||||||
Internal-use software | 726,000 | (37,510 | ) | — | 688,490 | 4.8 | ||||||||||||
Acquired Patents | 1,100,000 | (806,667 | ) | — | 293,333 | 1.4 | ||||||||||||
$ | 12,224,000 | $ | (2,808,307 | ) | $ | (6,824,773 | ) | $ | 2,590,920 | |||||||||
Summary of estimated amortization expense for intangible assets | The estimated amortization expense for intangible assets for the next five years and thereafter is as follows: | |||||||||||||||||
Period | Estimated | |||||||||||||||||
Amortization | ||||||||||||||||||
Expense | ||||||||||||||||||
2015 | $ | 436,028 | ||||||||||||||||
2016 | 362,694 | |||||||||||||||||
2017 | 362,694 | |||||||||||||||||
2018 | 318,811 | |||||||||||||||||
2019 | 192,000 | |||||||||||||||||
Thereafter | 336,000 | |||||||||||||||||
Total | $ | 2,008,227 | ||||||||||||||||
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Payables and Accruals [Abstract] | ||||||||
Schedule of accounts payable and accrued expenses | The following schedule presents the details of accounts payable and accrued expenses as of December 31, 2014 and 2013: | |||||||
2014 | 2013 | |||||||
Accounts payable | $ | 1,080,167 | $ | 1,808,335 | ||||
Accrued payroll and related costs | 2,211,565 | 3,878,131 | ||||||
Accrued consulting and professional fees | 157,500 | 50,000 | ||||||
Royalty liability | 175,000 | 164,000 | ||||||
State & local taxes payable | 8,508 | 23,300 | ||||||
Other accrued expenses | 285,753 | 865,508 | ||||||
Total accounts payable and accrued expenses | $ | 3,918,493 | $ | 6,789,274 | ||||
Sharebased_Compensation_Tables
Share-based Compensation (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||
Summary of effect of share based compensation in the entity's statement of operations | The following table summarizes the effect of share based compensation in Wave's statement of operations for the years ended December 31: | ||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Cost of Sales | $ | 13,845 | $ | 28,084 | $ | 47,371 | |||||||||||||||
Selling, General & Administrative | 136,525 | 1,250,543 | 3,400,978 | ||||||||||||||||||
Research & Development | 59,591 | 416,215 | 1,382,482 | ||||||||||||||||||
Total | $ | 209,961 | $ | 1,694,842 | $ | 4,830,831 | |||||||||||||||
Schedule of values for the variables that were used to value options granted | The following values for the indicated variables were used to value options granted during the years ended December 31: | ||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Stock Option | Stock Purchase | Stock Option | Stock Purchase | Stock Option | Stock Purchase | ||||||||||||||||
Plans | Plan | Plans | Plan | Plans | Plan | ||||||||||||||||
Expected Term | 4.1 Years | 6 Months | 4.5 Years | 6 Months | 4.9 Years | 6 Months | |||||||||||||||
Risk-free Rate—range | 1.41% - 1.80% | 0.06% - 0.08% | 0.65% - 1.68% | 0.08% - 0.10% | 0.57% - 1.20% | 0.12% - 0.14% | |||||||||||||||
Risk-free Rate—wt. avg. | 1.57% | 7.00% | 1.09% | 0.10% | 0.85% | 0.13% | |||||||||||||||
Expected Volatility—range | 81.8% - 87.4% | 76.5% - 89.1% | 88.4% - 98.1% | 89.6% - 90.8% | 91.8% - 96.0% | 62.6% - 95.6% | |||||||||||||||
Expected Volatility—wt. avg. | 74.60% | 84.20% | 93.90% | 90.50% | 92.50% | 75.50% | |||||||||||||||
Dividend Yield | 0% | 0% | 0% | 0% | 0% | 0% | |||||||||||||||
Summary of stock option activity | A summary of option activity for all Wave option plans through December 31, 2014 follows: | ||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Number of | Weighted | Number of | Weighted | Number of | Weighted | ||||||||||||||||
Shares | Average | Shares | Average | Shares | Average | ||||||||||||||||
Exercise | Exercise | Exercise | |||||||||||||||||||
Price | Price | Price | |||||||||||||||||||
Balance at beginning of year | 3,383,554 | $ | 7.78 | 3,341,575 | $ | 9.51 | 2,936,392 | $ | 10.2 | ||||||||||||
Granted | 1,488,300 | 1.19 | 950,222 | 2.69 | 732,081 | 8.2 | |||||||||||||||
Forfeited | (593,476 | ) | 1.73 | (495,396 | ) | 7.63 | (123,875 | ) | 10.88 | ||||||||||||
Expired | (933,496 | ) | 10.04 | (399,864 | ) | 10.55 | (180,223 | ) | 15.2 | ||||||||||||
Exercised | — | — | (12,983 | ) | 3.24 | (22,800 | ) | 3.48 | |||||||||||||
Balance at end of year | 3,344,882 | 5.2 | 3,383,554 | 7.78 | 3,341,575 | 9.51 | |||||||||||||||
Exercisable at end of year | 1,833,719 | 8.04 | 2,304,154 | $ | 8.94 | 2,129,510 | $ | 8.68 | |||||||||||||
Additional shares available for grant at end of year | 2,190,092 | 2,371,405 | 1,146,683 | ||||||||||||||||||
Summary of information about stock options outstanding | The following table summarizes information about stock options outstanding under the Wave stock options plans as of December 31, 2014: | ||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||
Exercise Price Range | Number | Weighted | Weighted | Number | Weighted | ||||||||||||||||
Outstanding | Average | Average | Exercisable | Average | |||||||||||||||||
Remaining | Exercise | Exercise | |||||||||||||||||||
Contractual Life | Price | Price | |||||||||||||||||||
$0.25 - $3.50 | 1,707,528 | 8.3 | $ | 1.47 | 454,541 | $ | 2.74 | ||||||||||||||
$3.51 - $7.00 | 353,806 | 7.2 | $ | 3.97 | 176,448 | $ | 4.12 | ||||||||||||||
$7.01 - $8.00 | 482,654 | 3.4 | $ | 7.69 | 482,654 | $ | 7.69 | ||||||||||||||
$8.01 - $12.00 | 483,055 | 5.7 | $ | 9.13 | 402,237 | $ | 9.19 | ||||||||||||||
$12.01 - $18.00 | 81,306 | 2.9 | $ | 13.19 | 81,306 | $ | 13.19 | ||||||||||||||
$18.01 - $20.00 | 236,533 | 5.6 | $ | 18.36 | 236,533 | $ | 18.36 | ||||||||||||||
3,344,882 | 1,833,719 | ||||||||||||||||||||
Warrants_Tables
Warrants (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ||||||||||||||||
Schedule of warrants outstanding | A summary of warrants outstanding at December 31, 2014, follows: | |||||||||||||||
Warrants Outstanding | Warrants Exercisable | |||||||||||||||
Exercise Price | Number of | Weighted | Weighted | Number of | Weighted | |||||||||||
Shares | Average | Average | Shares | Average | ||||||||||||
Remaining | Exercise | Exercise | ||||||||||||||
Contractual Life | Price | Price | ||||||||||||||
(in years) | ||||||||||||||||
$0.25 - $2.00 | 2,730,454 | 4.2 | $ | 1.68 | 2,730,454 | $ | 1.68 | |||||||||
$2.01 - $4.00 | 1,708,492 | 2.9 | $ | 2.83 | 1,708,492 | $ | 2.83 | |||||||||
$4.01 - $4.62 | 117,934 | 0.1 | $ | 4.62 | 117,934 | $ | 4.62 | |||||||||
4,556,880 | 3.6 | $ | 2.19 | 4,556,880 | $ | 2.19 | ||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||
Schedule of Loss before income tax expense | Loss before income tax expense for the United States of America and the State of Israel for the years ended December 31, 2014, 2013 and 2012 consisted of: | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Loss before income tax expense: | ||||||||||||
United States of America | $ | (12,350,762 | ) | $ | (15,416,885 | ) | $ | (23,482,045 | ) | |||
State of Israel | (517,836 | ) | (4,896,769 | ) | (10,468,470 | ) | ||||||
$ | (12,868,598 | ) | $ | (20,313,654 | ) | $ | (33,950,515 | ) | ||||
Schedule of components of income tax expense attributable to income from continuing operations | Income tax expense attributable to income from continuing operations for the years ended December 31, 2014, 2013 and 2012 consisted of: | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Current income tax expense: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | 12,000 | 10,610 | 12,033 | |||||||||
Foreign | — | — | — | |||||||||
12,000 | 10,610 | 12,033 | ||||||||||
Deferred income tax expense: | ||||||||||||
Federal | — | — | — | |||||||||
State | — | — | — | |||||||||
Foreign | — | — | — | |||||||||
— | — | — | ||||||||||
Total income tax expense | $ | 12,000 | $ | 10,610 | $ | 12,033 | ||||||
Schedule of significant differences between the United States federal statutory tax rate and the Company's effective tax rate for financial statement reporting purposes | The following table summarizes the significant differences between the United States federal statutory tax rate and the Company's effective tax rate for financial statement reporting purposes: | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Statutory tax rate | 34 | % | 34 | % | 34 | % | ||||||
Stock-based compensation on ISO's | — | (4 | ) | (7 | ) | |||||||
State tax, net of federal benefit | — | — | — | |||||||||
Change in valuation allowance | (34 | ) | (30 | ) | (27 | ) | ||||||
Total | — | % | — | % | — | % | ||||||
Schedule of tax effects of temporary differences that give rise to the deferred tax asset | The tax effects of temporary differences that give rise to the deferred tax asset at December 31, 2014 and 2013 are as follows: | |||||||||||
2014 | 2013 | |||||||||||
Deferred tax assets: | ||||||||||||
Net operating loss carryforwards | $ | 110,747,000 | $ | 106,210,000 | ||||||||
Accrued expenses | 1,878,000 | 2,463,000 | ||||||||||
Intangibles | 86,000 | 289,000 | ||||||||||
Reserves | — | 846,000 | ||||||||||
Depreciation | 211,000 | 159,000 | ||||||||||
Net deferred tax assets | 112,922,000 | 109,967,000 | ||||||||||
Less valuation allowance | (112,553,000 | ) | (109,565,000 | ) | ||||||||
Deferred tax assets | 369,000 | 402,000 | ||||||||||
Deferred tax liabilities: | ||||||||||||
Acquired intangible assets | (369,000 | ) | (402,000 | ) | ||||||||
Net deferred tax assets (liabilities) | $ | — | $ | — | ||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Schedule of future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) | Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2014 are as follows: | |||
2015 | $ | 1,091,000 | ||
2016 | 423,000 | |||
2017 | 13,000 | |||
2018 | 2,000 | |||
Total minimum lease payments | $ | 1,529,000 | ||
Segment_Reporting_Tables
Segment Reporting (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||
Schedule of sales by geographic area | The following table details Wave's sales by geographic area for the years ended December 31, 2014, 2013 and 2012. Geographic area is based on the location of where the products were delivered or services rendered. | |||||||||||||||
United States | Europe | Asia | Total | |||||||||||||
of America | ||||||||||||||||
2014 | ||||||||||||||||
Wave products and services | $ | 11,251,506 | $ | 4,381,551 | $ | 1,337,777 | $ | 16,970,834 | ||||||||
% of Total | 66 | % | 26 | % | 8 | % | 100 | % | ||||||||
2013 | ||||||||||||||||
Wave products and services | $ | 16,267,661 | $ | 6,364,707 | $ | 1,768,484 | $ | 24,400,852 | ||||||||
% of Total | 67 | % | 26 | % | 7 | % | 100 | % | ||||||||
2012 | ||||||||||||||||
Wave products and services | $ | 21,187,703 | $ | 6,549,013 | $ | 1,105,797 | $ | 28,842,513 | ||||||||
% of Total | 73 | % | 23 | % | 4 | % | 100 | % |
Selected_Quarterly_Financial_D1
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||
Schedule of selected quarterly financial data | ||||||||||||||||
Quarter-ended | ||||||||||||||||
December 31, | September 30, | June 30, | March 31, | |||||||||||||
2014 | 2014 | 2014 | 2014 | |||||||||||||
Revenues | $ | 2,866,371 | $ | 4,332,104 | $ | 4,439,820 | $ | 5,332,539 | ||||||||
Cost of net revenues | 303,601 | 333,828 | 338,519 | 312,828 | ||||||||||||
Loss from operations | (4,366,992 | ) | (2,077,621 | ) | (3,754,279 | ) | (3,246,930 | ) | ||||||||
Net loss | (3,685,704 | ) | (2,105,859 | ) | (3,795,530 | ) | (3,293,505 | ) | ||||||||
Net loss per common share—basic and diluted | $ | (0.07 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.09 | ) | ||||
Quarter-ended | ||||||||||||||||
December 31, | September 30, | June 30, | March 31, | |||||||||||||
2013 | 2013 | 2013 | 2013 | |||||||||||||
Revenues | $ | 5,613,559 | $ | 6,251,325 | $ | 6,742,242 | $ | 5,793,726 | ||||||||
Cost of net revenues | 313,310 | 471,200 | 579,466 | 2,332,960 | ||||||||||||
Loss from operations | (3,611,657 | ) | (2,895,031 | ) | (3,432,071 | ) | (10,157,219 | ) | ||||||||
Net loss | (3,676,389 | ) | (2,943,823 | ) | (3,490,297 | ) | (10,213,755 | ) | ||||||||
Net loss per common share—basic and diluted | $ | (0.11 | ) | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.39 | ) |
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Accounts Receivable and Allowance For Doubtful Accounts | |||
Unbilled amounts included in accounts receivable | 164,834 | 125,497 | |
Dell, Inc. | |||
Concentrations of credit risks | |||
Receivables, classified as pledged receivables | 0 | 1,683,188 | |
Sales revenue | Customer concentration | Dell, Inc. | |||
Concentrations of credit risks | |||
Concentration risk (as a percent) | 32.00% | 46.00% | 55.00% |
Accounts receivable | Dell Inc. and its affiliates | |||
Concentrations of credit risks | |||
Accounts receivable | 134,621 | 1,025,377 | 1,187,398 |
Significant_Accounting_Policie3
Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2014 | |
Property, plant and equipment other than leasehold improvements | Minimum | |
Property and equipment | |
Useful life | 3 years |
Property, plant and equipment other than leasehold improvements | Maximum | |
Property and equipment | |
Useful life | 5 years |
Leasehold improvements | Minimum | |
Property and equipment | |
Useful life | 3 years |
Leasehold improvements | Maximum | |
Property and equipment | |
Useful life | 4 years |
Significant_Accounting_Policie4
Significant Accounting Policies (Details 3) (Capitalized internal-use software development costs) | 12 Months Ended |
Dec. 31, 2014 | |
Capitalized internal-use software development costs | |
Capitalized internal-use software development costs | |
Estimated useful life | 5 years |
Significant_Accounting_Policie5
Significant Accounting Policies (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | 9 Months Ended | |||||||||
Share data in Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 |
item | item | |||||||||||
Class | Class | |||||||||||
Reclassifications | ||||||||||||
Loss per common share - basic and diluted (in dollars per share) | $0.07 | $0.05 | $0.09 | $0.09 | $0.11 | $0.09 | $0.12 | $0.39 | $0.30 | $0.68 | $1.41 | |
Revenue Recognition | ||||||||||||
Number of classes of end user customers | 2 | 2 | ||||||||||
Minimum order of licenses of end user customers defined as large | 5,000 | 5,000 | ||||||||||
Maximum order of licenses of end user customers defined as small | 5,000 | 5,000 | ||||||||||
Term of maintenance (in years) | 1 year | |||||||||||
Weighted average potential common shares | ||||||||||||
Loss Per Share | ||||||||||||
Antidilutive securities excluded from earnings per share | 144 | 99 | 615 | |||||||||
Weighted average employee stock options and other stock warrants | ||||||||||||
Loss Per Share | ||||||||||||
Antidilutive securities excluded from earnings per share | 6,104 | 5,504 | 3,669 | |||||||||
Immaterial Error Related to Share-Based Compensation [Member] | ||||||||||||
Reclassifications | ||||||||||||
Quantifying misstatement in current year financial statements, amount | $820,000 | |||||||||||
Loss per common share - basic and diluted (in dollars per share) | $0.02 | $0.02 | ||||||||||
Immaterial Error Related to Royalty Liability for Grants Received [Member] | ||||||||||||
Reclassifications | ||||||||||||
Quantifying misstatement in current year financial statements, amount | $580,000 | $580,000 | ||||||||||
Loss per common share - basic and diluted (in dollars per share) | $0.01 | $0.01 |
Reverse_Stock_Split_Details
Reverse Stock Split (Details) (USD $) | 0 Months Ended | |||
Jun. 28, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 28, 2013 | |
Class A Common Stock | ||||
Reverse stock split | ||||
Reverse stock split ratio | 0.25 | |||
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | $0.01 |
Class B Common Stock | ||||
Reverse stock split | ||||
Reverse stock split ratio | 0.25 | |||
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | $0.01 |
Liquidity_Details
Liquidity (Details) (USD $) | 12 Months Ended | 0 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 26, 2015 | Mar. 02, 2015 | Dec. 31, 2011 | Aug. 09, 2013 | |
Liquidity | |||||||
Accumulated deficit | $430,121,078 | $417,240,480 | |||||
Negative working capital | 5,048,000 | ||||||
Cash on hand | 1,777,414 | 2,120,102 | 2,112,769 | 3,385,035 | |||
Liquidity | |||||||
Exercise price of warrants (in dollars per share) | $0.91 | ||||||
Net proceeds from issuance of common stock | 14,457,789 | 11,706,066 | 13,659,587 | ||||
Class A Common Stock | Warrants- January 2015 financing - subscribers | Subsequent event | |||||||
Liquidity | |||||||
Common stock agreed to be issued against warrants (in shares) | 2,205,216 | ||||||
Exercise price of warrants (in dollars per share) | $0.70 | ||||||
Placement agent fees equal to gross proceeds from offering (as a percent) | 6.00% | ||||||
Net proceeds from issuance of common stock | 3,338,000 | ||||||
Placement agent fees | 215,000 | ||||||
Legal and other fees | 30,000 | ||||||
Class A Common Stock | SRA Warrants - 2015 Financing | Subsequent event | |||||||
Liquidity | |||||||
Common stock agreed to be issued against warrants (in shares) | 330,783 | ||||||
Exercise price of warrants (in dollars per share) | $0.70 | ||||||
2015 shelf registration statement | Common Stock | Funding plan | |||||||
Liquidity | |||||||
Shelf registration statement, amount | 15,000,000 | ||||||
2015 shelf registration statement | Class A Common Stock | Subsequent event | |||||||
Liquidity | |||||||
Number of shares sold | 5,513,044 | ||||||
Share price (in dollars per share) | $0.65 | ||||||
Gross proceeds from issuance of common stock | 3,583,479 | ||||||
Proceeds from Issuances of Common Stock, Gross Amount Remaining | 9,872,000 | ||||||
Proceeds from issuance of Common Stock, Restricted Amount | $9,203,000 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property and equipment | |||
Property and equipment, gross | $4,293,634 | $7,929,904 | |
Less: Accumulated depreciation and amortization | -3,881,879 | -7,333,084 | |
Total | 411,755 | 596,820 | |
Depreciation and amortization expense on property and equipment | 303,000 | 461,000 | 535,000 |
Computer equipment | |||
Property and equipment | |||
Property and equipment, gross | 2,729,409 | 4,391,637 | |
Furniture, fixtures and improvements | |||
Property and equipment | |||
Property and equipment, gross | 812,977 | 812,977 | |
Computer software | |||
Property and equipment | |||
Property and equipment, gross | $751,248 | $2,725,290 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Dec. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Changes in the carrying amount of goodwill | |||||||
Balance at the beginning of the period | $1,448,000 | $1,448,000 | |||||
Balance at the end of the period | 1,448,000 | 1,448,000 | 1,448,000 | ||||
Goodwill impairment charge and the intangible assets impairment charge | 0 | 2,590,000 | 4,054,732 | ||||
Intangible Asset | |||||||
Gross Carrying Amount | 12,224,000 | 12,224,000 | 12,224,000 | ||||
Accumulated Amortization | -3,391,000 | -3,391,000 | -2,808,307 | ||||
Accumulated Impairment Loss | -6,824,773 | -6,824,773 | -6,824,773 | ||||
Net | 2,008,227 | 2,008,227 | 2,590,920 | ||||
Intangible assets amortization expense | 583,000 | 548,000 | 1,597,000 | ||||
Developed Technology | |||||||
Intangible Asset | |||||||
Gross Carrying Amount | 6,426,000 | 6,426,000 | 6,426,000 | ||||
Accumulated Amortization | -1,292,297 | -1,292,297 | -1,266,803 | ||||
Accumulated Impairment Loss | -5,038,100 | -5,038,100 | -5,038,100 | ||||
Net | 95,603 | 95,603 | 121,097 | ||||
Weighted Average Remaining Useful Life (in years) | 3 years 9 months 18 days | 4 years 9 months 18 days | |||||
Customer Relationships | |||||||
Intangible Asset | |||||||
Gross Carrying Amount | 3,972,000 | 3,972,000 | 3,972,000 | ||||
Accumulated Amortization | -889,327 | -889,327 | -697,327 | ||||
Accumulated Impairment Loss | -1,786,673 | -1,786,673 | -1,786,673 | ||||
Net | 1,296,000 | 1,296,000 | 1,488,000 | ||||
Weighted Average Remaining Useful Life (in years) | 6 years 9 months 18 days | 7 years 9 months 18 days | |||||
Internal-use software | |||||||
Intangible Asset | |||||||
Gross Carrying Amount | 726,000 | 726,000 | 726,000 | ||||
Accumulated Amortization | -182,710 | -182,710 | -37,510 | ||||
Net | 543,290 | 543,290 | 688,490 | ||||
Weighted Average Remaining Useful Life (in years) | 3 years 9 months 18 days | 4 years 9 months 18 days | |||||
Acquired Patents | |||||||
Intangible Asset | |||||||
Gross Carrying Amount | 1,100,000 | 1,100,000 | 1,100,000 | ||||
Accumulated Amortization | -1,026,666 | -1,026,666 | -806,667 | ||||
Net | 73,334 | 73,334 | 293,333 | ||||
Weighted Average Remaining Useful Life (in years) | 4 months 24 days | 1 year 4 months 24 days | |||||
Safend | |||||||
Changes in the carrying amount of goodwill | |||||||
Balance at the beginning of the period | 4,038,000 | 1,448,000 | 1,448,000 | 4,038,000 | |||
Impairment loss | -2,200,000 | -2,590,000 | 0 | 0 | -2,590,000 | -2,200,000 | |
Balance at the end of the period | 1,448,000 | 4,038,000 | 1,448,000 | 1,448,000 | 4,038,000 | ||
Impairment charge on intangible assets | 1,600,000 | 5,300,000 | 0 | ||||
Goodwill impairment charge and the intangible assets impairment charge | 4,100,000 | ||||||
Safend | Customer relationship and in-process technology | |||||||
Changes in the carrying amount of goodwill | |||||||
Impairment charge on intangible assets | 1,900,000 | ||||||
Safend | Developed Technology | |||||||
Changes in the carrying amount of goodwill | |||||||
Impairment charge on intangible assets | $1,600,000 | $3,400,000 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Estimated Amortization Expense | ||
2015 | $436,028 | |
2016 | 362,694 | |
2017 | 362,694 | |
2018 | 318,811 | |
2019 | 192,000 | |
Thereafter | 336,000 | |
Net | $2,008,227 | $2,590,920 |
Secured_Borrowings_and_Pledged1
Secured Borrowings and Pledged Receivables (Details) (Secured borrowings collateralized by receivables, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Secured borrowings collateralized by receivables | ||
Secured Borrowings and Collateralized Receivables | ||
Carrying value of secured borrowing as a percentage of associated pledged receivable | 85.00% | |
Percentage of holdback provision as per the TRE agreement | 15.00% | |
Interest rate on secured borrowings for every thirty days outstanding (as a percent) | 1.50% | |
Annual effective rate of interest (as a percent) | 18.00% | |
Receivables transferred to CapFlow and TRE, remain uncollected | $0 | $1,683,188 |
Secured borrowings | 0 | 1,430,710 |
Interest expense associated with the secured borrowings | 35,227 | 117,907 |
Proceeds from the transfer of pledged receivables | 1,693,450 | 8,316,898 |
Amount of pledged receivables collected by CapFlow and TRE | 1,693,450 | 6,886,188 |
Pledged receivables repurchased | $0 | $0 |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $1,080,167 | $1,808,335 |
Accrued payroll and related costs | 2,211,565 | 3,878,131 |
Accrued consulting and professional fees | 157,500 | 50,000 |
Royalty liability | 175,000 | 164,000 |
State & local taxes payable | 8,508 | 23,300 |
Other accrued expenses | 285,753 | 865,508 |
Total accounts payable and accrued expenses | $3,918,493 | $6,789,274 |
Preferred_Stock_Details
Preferred Stock (Details) (Convertible preferred stock, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Convertible preferred stock | ||
Preferred Stock | ||
Shares authorized for issuance | 2,000 | |
Par value (in dollars per share) | $0.01 | |
Shares issued | 0 | 0 |
Shares outstanding | 0 | 0 |
Common_Stock_Details
Common Stock (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 01, 2014 | Jun. 01, 2014 | Dec. 01, 2013 | Jun. 01, 2013 | Dec. 01, 2012 | Jun. 01, 2012 | Sep. 16, 2013 | Sep. 16, 2013 | Jun. 11, 2014 | Dec. 18, 2013 | Jul. 25, 2013 | Apr. 23, 2013 | Oct. 23, 2012 | Aug. 08, 2012 | Mar. 13, 2013 | |
Common Stock | ||||||||||||||||||
Net proceeds from issuance of common stock | $14,457,789 | $11,706,066 | $13,659,587 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $0.91 | |||||||||||||||||
Gross proceeds received from exercise of warrants | 121,862 | 0 | 320,500 | |||||||||||||||
Value of shares issued to acquire a perpetual license under the agreement | 500,000 | |||||||||||||||||
Proceeds from employee stock option exercises | 0 | 42,039 | 79,503 | |||||||||||||||
Issuance of shares upon exercise of employee stock options | 0 | 12,983 | 22,800 | |||||||||||||||
Proceeds from employee stock purchase plans | 158,334 | 263,599 | 666,095 | |||||||||||||||
Class A Common Stock | 2004 Employee Stock Purchase Plan | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Share price (in dollars per share) | $0.88 | $0.94 | $0.98 | $1.29 | $2.14 | $3.40 | ||||||||||||
Issuance of shares | 67,206 | 105,454 | 93,916 | 132,970 | 89,571 | 139,480 | ||||||||||||
Proceeds from employee stock purchase plans | 58,839 | 99,495 | 91,803 | 171,796 | 191,862 | 474,233 | ||||||||||||
Class A Common Stock | Stock Options | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Proceeds from employee stock option exercises | 42,039 | 79,503 | ||||||||||||||||
Issuance of shares upon exercise of employee stock options | 12,983 | 22,800 | ||||||||||||||||
Exercise price of employee stock options exercised (in dollars per share) | $3.24 | |||||||||||||||||
Class A Common Stock | EXO5 | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares issued to acquire a perpetual license under the agreement | 372,578 | 372,578 | ||||||||||||||||
Value of shares issued to acquire a perpetual license under the agreement | 500,000 | 500,000 | ||||||||||||||||
Class A Common Stock | Minimum | Stock Options | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Exercise price of employee stock options exercised (in dollars per share) | $2.08 | |||||||||||||||||
Class A Common Stock | Maximum | Stock Options | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Exercise price of employee stock options exercised (in dollars per share) | $7.80 | |||||||||||||||||
Class A Common Stock | Warrants - December 2013 financing - Subscribers | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Exercise price of warrants (in dollars per share) | $0.91 | |||||||||||||||||
Gross proceeds received from exercise of warrants | 121,862 | |||||||||||||||||
Issuance of shares upon exercise of warrants | 133,914 | |||||||||||||||||
Class A Common Stock | SRA Warrants - 2013 financing | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 72,268 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $1.27 | |||||||||||||||||
Class A Common Stock | Warrants Issued, March 2013 | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 150,603 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $3.32 | |||||||||||||||||
Class A Common Stock | Warrants - 2012 and 2009 financing | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Gross proceeds received from exercise of warrants | 320,500 | |||||||||||||||||
Issuance of shares upon exercise of warrants | 145,000 | |||||||||||||||||
Class A Common Stock | Warrants - 2012 and 2009 financing | Minimum | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Exercise price of warrants (in dollars per share) | $2.20 | |||||||||||||||||
Class A Common Stock | Warrants - 2012 and 2009 financing | Maximum | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Exercise price of warrants (in dollars per share) | $2.32 | |||||||||||||||||
Class A Common Stock | SRA Warrants - 2009 financing | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Issuance of shares upon exercise of warrants | 10,111 | |||||||||||||||||
Class A Common Stock | At the market offerings through MLV | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares sold | 5,410,450 | 3,811,523 | 1,973,267 | |||||||||||||||
Net proceeds from issuance of common stock | 5,383,009 | 5,352,893 | 9,053,593 | |||||||||||||||
Offering costs | 172,000 | 177,000 | 290,000 | |||||||||||||||
Class A Common Stock | At the market offerings through MLV | Minimum | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Share price (in dollars per share) | $0.90 | $0.90 | $2.60 | |||||||||||||||
Class A Common Stock | At the market offerings through MLV | Maximum | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Share price (in dollars per share) | $1.39 | $2.90 | $9.12 | |||||||||||||||
Class A Common Stock | 2013 shelf registration statement | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares sold | 5,225,560 | |||||||||||||||||
Share price (in dollars per share) | $1.90 | |||||||||||||||||
Gross proceeds from issuance of common stock | 9,928,564 | |||||||||||||||||
Placement agent fees equal to gross proceeds from offering (as a percent) | 7.00% | |||||||||||||||||
Net proceeds from issuance of common stock | 9,075,000 | |||||||||||||||||
Placement agent fees | 695,000 | |||||||||||||||||
Legal and other fees | 159,000 | |||||||||||||||||
Class A Common Stock | 2013 shelf registration statement | Warrants Issued, June 2014 | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 2,090,224 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $1.90 | |||||||||||||||||
Class A Common Stock | 2013 shelf registration statement | Warrants - December 2013 financing - Subscribers | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares sold | 1,253,351 | |||||||||||||||||
Share price (in dollars per share) | $0.97 | |||||||||||||||||
Gross proceeds from issuance of common stock | 1,218,884 | |||||||||||||||||
Placement agent fees equal to gross proceeds from offering (as a percent) | 6.00% | |||||||||||||||||
Net proceeds from issuance of common stock | 1,116,000 | |||||||||||||||||
Placement agent fees | 73,000 | |||||||||||||||||
Legal and other fees | 30,000 | |||||||||||||||||
Number of shares under warrants | 626,674 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $0.91 | |||||||||||||||||
Class A Common Stock | 2013 shelf registration statement | SRA Warrants - 2013 financing | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Exercise price of warrants (in dollars per share) | $0.91 | |||||||||||||||||
Class A Common Stock | 2013 shelf registration statement | SRA Warrants - 2013 financing | Maximum | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 75,201 | |||||||||||||||||
Class A Common Stock | 2011 shelf registration statement | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares sold | 1,204,470 | 1,585,000 | 831,188 | 646,956 | ||||||||||||||
Share price (in dollars per share) | $1.27 | $2 | $4.01 | $2.57 | ||||||||||||||
Gross proceeds from issuance of common stock | 1,529,677 | 3,170,000 | 3,333,062 | 1,662,677 | ||||||||||||||
Placement agent fees equal to gross proceeds from offering (as a percent) | 6.00% | 6.00% | ||||||||||||||||
Net proceeds from issuance of common stock | 1,408,000 | 2,920,000 | 3,073,000 | 1,533,000 | ||||||||||||||
Placement agent fees | 92,000 | 190,200 | 199,984 | 99,761 | ||||||||||||||
Legal and other fees | 30,000 | 60,000 | 60,000 | 30,000 | ||||||||||||||
Class A Common Stock | 2011 shelf registration statement | Warrants - April 2013 financing - Subscribers | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 792,500 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $2.48 | |||||||||||||||||
Class A Common Stock | 2011 shelf registration statement | Warrants - October 2012 financing | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 415,594 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $3.76 | |||||||||||||||||
Class A Common Stock | 2011 shelf registration statement | Warrants - August 2012 financing - Subscribers | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 323,478 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $2.32 | |||||||||||||||||
Class A Common Stock | 2011 shelf registration statement | Warrants - August 2012 financing - Placement Agent | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares under warrants | 38,817 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $2.32 | |||||||||||||||||
Class A Common Stock | Equity issuance | ||||||||||||||||||
Common Stock | ||||||||||||||||||
Number of shares sold | 301,205 | |||||||||||||||||
Share price (in dollars per share) | $3.32 | |||||||||||||||||
Gross proceeds from issuance of common stock | 1,000,000 | |||||||||||||||||
Placement agent fees equal to gross proceeds from offering (as a percent) | 6.00% | |||||||||||||||||
Net proceeds from issuance of common stock | 910,000 | |||||||||||||||||
Placement agent fees | 60,000 | |||||||||||||||||
Legal and other fees | $30,000 |
Sharebased_Compensation_Detail
Share-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2014 | |
1994 Employee Stock Option Plan | |
Share-based Compensation | |
Vesting period (in years) | 3 years |
Expiration period (in years) | 10 years |
1994 Employee Stock Option Plan | Class A common stock | |
Share-based Compensation | |
Shares reserved for issuance | 6,000,000 |
Non Employee Directors Stock Option Plan | Class A common stock | |
Share-based Compensation | |
Shares reserved for issuance | 250,000 |
Non Employee Directors Stock Option Plan | Options | |
Share-based Compensation | |
Expiration period (in years) | 10 years |
Non Employee Directors Stock Option Plan | Options | Class A common stock | |
Share-based Compensation | |
Options granted (in shares) | 3,750 |
Additional annual grant (in shares) | 3,750 |
Sharebased_Compensation_Detail1
Share-based Compensation (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation | |||
Share-based Compensation expense | $209,961 | $1,694,842 | $4,830,831 |
Cost of Sales | |||
Share-based Compensation | |||
Share-based Compensation expense | 13,845 | 28,084 | 47,371 |
Selling, General & Administrative | |||
Share-based Compensation | |||
Share-based Compensation expense | 136,525 | 1,250,543 | 3,400,978 |
Research & Development | |||
Share-based Compensation | |||
Share-based Compensation expense | $59,591 | $416,215 | $1,382,482 |
Sharebased_Compensation_Detail2
Share-based Compensation (Details 3) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Stock option plans | |||
Share-based Compensation | |||
Expected Term | 4 years 1 month 6 days | 4 years 6 months | 4 years 10 months 24 days |
Risk-free Rate - minimum (as a percent) | 1.41% | 0.65% | 0.57% |
Risk-free Rate - maximum (as a percent) | 1.80% | 1.68% | 1.20% |
Expected Volatility - minimum (as a percent) | 81.80% | 88.40% | 91.80% |
Expected Volatility - maximum (as a percent) | 87.40% | 98.10% | 96.00% |
Dividend Yield (as a percent) | 0.00% | 0.00% | 0.00% |
Stock option plans | Wt. avg. | |||
Share-based Compensation | |||
Risk-free Rate (as a percent) | 1.57% | 1.09% | 0.85% |
Expected Volatility (as a percent) | 74.60% | 93.90% | 92.50% |
Stock purchase plan | |||
Share-based Compensation | |||
Expected Term | 6 months | 6 months | 6 months |
Risk-free Rate - minimum (as a percent) | 0.06% | 0.08% | 0.12% |
Risk-free Rate - maximum (as a percent) | 0.08% | 0.10% | 0.14% |
Expected Volatility - minimum (as a percent) | 76.50% | 89.60% | 62.60% |
Expected Volatility - maximum (as a percent) | 89.10% | 90.80% | 95.60% |
Dividend Yield (as a percent) | 0.00% | 0.00% | 0.00% |
Stock purchase plan | Wt. avg. | |||
Share-based Compensation | |||
Risk-free Rate (as a percent) | 7.00% | 0.10% | 0.13% |
Expected Volatility (as a percent) | 84.20% | 90.50% | 75.50% |
Sharebased_Compensation_Detail3
Share-based Compensation (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Number of Shares | |||
Balance at beginning of year (in shares) | 3,383,554 | 3,341,575 | 2,936,392 |
Granted (in shares) | 1,488,300 | 950,222 | 732,081 |
Forfeited (in shares) | -593,476 | -495,396 | -123,875 |
Expired (in shares) | -933,496 | -399,864 | -180,223 |
Exercised (in shares) | 0 | -12,983 | -22,800 |
Balance at end of year (in shares) | 3,344,882 | 3,383,554 | 3,341,575 |
Exercisable at end of year (in shares) | 1,833,719 | 2,304,154 | 2,129,510 |
Additional shares available for grant at end of year | 2,190,092 | 2,371,405 | 1,146,683 |
Weighted Average Exercise Price | |||
Balance at beginning of year (in dollars per share) | $7.78 | $9.51 | $10.20 |
Granted (in dollars per share) | $1.19 | $2.69 | $8.20 |
Forfeited (in dollars per share) | $1.73 | $7.63 | $10.88 |
Expired (in dollars per share) | $10.04 | $10.55 | $15.20 |
Exercised (in dollars per share) | $0 | $3.24 | $3.48 |
Balance at end of year (in dollars per share) | $5.20 | $7.78 | $9.51 |
Exercisable at end of year (in dollars per share) | $8.04 | $8.94 | $8.68 |
Additional disclosures | |||
Weighted average grant date fair value (in dollars per share) | $0.61 | $1.89 | $5.72 |
Weighted average remaining contractual term for options outstanding (in years) | 6 years 9 months 18 days | ||
Weighted average remaining contractual term for options exercisable (in years) | 4 years 10 months 24 days | ||
Unrecognized stock-based compensation cost | $945,000 | ||
Weighted average period over which unrecognized stock-based compensation cost is expected to be expensed | 1 year 4 months 24 days | ||
Total fair value of shares vested | 2,402,000 | 4,405,000 | 3,996,000 |
Intrinsic value of outstanding, vested and currently exercisable share options | $0 |
Sharebased_Compensation_Detail4
Share-based Compensation (Details 5) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Options Outstanding | |
Number Outstanding (in shares) | 3,344,882 |
Options Exercisable | |
Number Exercisable (in shares) | 1,833,719 |
$0.25 - $3.50 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $0.25 |
Exercise price, high end of range (in dollars per share) | $3.50 |
Options Outstanding | |
Number Outstanding (in shares) | 1,707,528 |
Weighted Average Remaining Contractual life (in years) | 8 years 3 months 18 days |
Weighted Average Exercise Price (in dollars per share) | $1.47 |
Options Exercisable | |
Number Exercisable (in shares) | 454,541 |
Weighted Average Exercise Price (in dollars per share) | $2.74 |
$3.51 - $7.00 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $3.51 |
Exercise price, high end of range (in dollars per share) | $7 |
Options Outstanding | |
Number Outstanding (in shares) | 353,806 |
Weighted Average Remaining Contractual life (in years) | 7 years 2 months 12 days |
Weighted Average Exercise Price (in dollars per share) | $3.97 |
Options Exercisable | |
Number Exercisable (in shares) | 176,448 |
Weighted Average Exercise Price (in dollars per share) | $4.12 |
$7.01 - $8.00 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $7.01 |
Exercise price, high end of range (in dollars per share) | $8 |
Options Outstanding | |
Number Outstanding (in shares) | 482,654 |
Weighted Average Remaining Contractual life (in years) | 3 years 4 months 24 days |
Weighted Average Exercise Price (in dollars per share) | $7.69 |
Options Exercisable | |
Number Exercisable (in shares) | 482,654 |
Weighted Average Exercise Price (in dollars per share) | $7.69 |
$8.01 - $12.00 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $8.01 |
Exercise price, high end of range (in dollars per share) | $12 |
Options Outstanding | |
Number Outstanding (in shares) | 483,055 |
Weighted Average Remaining Contractual life (in years) | 5 years 8 months 12 days |
Weighted Average Exercise Price (in dollars per share) | $9.13 |
Options Exercisable | |
Number Exercisable (in shares) | 402,237 |
Weighted Average Exercise Price (in dollars per share) | $9.19 |
$12.01 - $18.00 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $12.01 |
Exercise price, high end of range (in dollars per share) | $18 |
Options Outstanding | |
Number Outstanding (in shares) | 81,306 |
Weighted Average Remaining Contractual life (in years) | 2 years 10 months 24 days |
Weighted Average Exercise Price (in dollars per share) | $13.19 |
Options Exercisable | |
Number Exercisable (in shares) | 81,306 |
Weighted Average Exercise Price (in dollars per share) | $13.19 |
$18.01 - $20.00 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $18.01 |
Exercise price, high end of range (in dollars per share) | $20 |
Options Outstanding | |
Number Outstanding (in shares) | 236,533 |
Weighted Average Remaining Contractual life (in years) | 5 years 7 months 6 days |
Weighted Average Exercise Price (in dollars per share) | $18.36 |
Options Exercisable | |
Number Exercisable (in shares) | 236,533 |
Weighted Average Exercise Price (in dollars per share) | $18.36 |
$20.01 - $25.00 | |
Share-based Compensation | |
Exercise price, low end of range (in dollars per share) | $20.01 |
Exercise price, high end of range (in dollars per share) | $25 |
Sharebased_Compensation_Detail5
Share-based Compensation (Details 6) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation | |||
Aggregate proceeds | $158,334 | $263,599 | $666,095 |
Employee Stock Purchase Plan | |||
Share-based Compensation | |||
Maximum percentage of base earnings which employees may elect to have withheld to purchase shares | 15.00% | ||
Purchase price of share awards expressed as a percentage of market price | 85.00% | ||
Employee Stock Purchase Plan | Class A common stock | |||
Share-based Compensation | |||
Maximum amount of market value of shares which employees may elect to have withheld to purchase shares | 25,000 | ||
Shares purchased | 172,660 | 226,886 | 229,052 |
Average share price (in dollars per share) | $0.92 | $1.16 | $2.92 |
Aggregate proceeds | $158,334 | $263,599 | $666,095 |
Warrants_Details
Warrants (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Warrants | |
Exercise price of warrants (in dollars per share) | $0.91 |
Warrants Outstanding (in shares) | 4,556,880 |
Weighted Average Remaining Contractual Life (in years) | 3 years 7 months 6 days |
Weighted Average Exercise Price (in dollars per share) | $2.19 |
Warrants Exercisable (in shares) | 4,556,880 |
Weighted Average Exercise Price (in dollars per share) | $2.19 |
$0.25 - $2.00 | |
Warrants | |
Warrants Outstanding (in shares) | 2,730,454 |
Weighted Average Remaining Contractual Life (in years) | 4 years 2 months 12 days |
Weighted Average Exercise Price (in dollars per share) | $1.68 |
Warrants Exercisable (in shares) | 2,730,454 |
Weighted Average Exercise Price (in dollars per share) | $1.68 |
$0.25 - $2.00 | Minimum | |
Warrants | |
Exercise price of warrants (in dollars per share) | $0.25 |
$0.25 - $2.00 | Maximum | |
Warrants | |
Exercise price of warrants (in dollars per share) | $2 |
$2.01 - $4.00 | |
Warrants | |
Warrants Outstanding (in shares) | 1,708,492 |
Weighted Average Remaining Contractual Life (in years) | 2 years 10 months 24 days |
Weighted Average Exercise Price (in dollars per share) | $2.83 |
Warrants Exercisable (in shares) | 1,708,492 |
Weighted Average Exercise Price (in dollars per share) | $2.83 |
$2.01 - $4.00 | Minimum | |
Warrants | |
Exercise price of warrants (in dollars per share) | $2.01 |
$2.01 - $4.00 | Maximum | |
Warrants | |
Exercise price of warrants (in dollars per share) | $4 |
$4.01 - $4.62 | |
Warrants | |
Warrants Outstanding (in shares) | 117,934 |
Weighted Average Remaining Contractual Life (in years) | 1 month 6 days |
Weighted Average Exercise Price (in dollars per share) | $4.62 |
Warrants Exercisable (in shares) | 117,934 |
Weighted Average Exercise Price (in dollars per share) | $4.62 |
$4.01 - $4.62 | Minimum | |
Warrants | |
Exercise price of warrants (in dollars per share) | $4.01 |
$4.01 - $4.62 | Maximum | |
Warrants | |
Exercise price of warrants (in dollars per share) | $4.62 |
Gain_on_Sale_of_eSign_Details
Gain on Sale of eSign (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 16, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Gain on sale of eSign | $1,304,579 | $0 | $0 | |
Proceeds from sale of eSign | 1,214,082 | 0 | 0 | |
eSignSystems [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sale of eSignSystems, transaction value | 1,214,000 | |||
Gain on sale of eSign | 1,304,579 | |||
Proceeds from sale of eSign | $1,214,082 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Loss before income tax expense: | |||
United States of America | ($12,350,762) | ($15,416,885) | ($23,482,045) |
State of Israel | -517,836 | -4,896,769 | -10,468,470 |
Loss before income tax expense | -12,868,598 | -20,313,654 | -33,950,515 |
Current income tax expense: | |||
Federal | 0 | 0 | 0 |
State | 12,000 | 10,610 | 12,033 |
Foreign | 0 | 0 | 0 |
Total | 12,000 | 10,610 | 12,033 |
Deferred income tax expense: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | 0 | 0 | 0 |
Total | 0 | 0 | 0 |
Total income tax expense | 12,000 | 10,610 | 12,033 |
Significant differences between the United States federal statutory tax rate and the company's effective tax rate | |||
Statutory tax rate (as a percent) | 34.00% | 34.00% | 34.00% |
Stock-based compensation on ISO's (as a percent) | 0.00% | -4.00% | -7.00% |
State tax, net of federal benefit (as a percent) | 0.00% | 0.00% | 0.00% |
Change in valuation allowance (as a percent) | -34.00% | -30.00% | -27.00% |
Total (as a percent) | 0.00% | 0.00% | 0.00% |
Deferred tax assets: | |||
Net operating loss carryforwards | 110,747,000 | 106,210,000 | |
Accrued expenses | 1,878,000 | 2,463,000 | |
Intangibles | 86,000 | 289,000 | |
Reserves | 0 | 846,000 | |
Depreciation | 211,000 | 159,000 | |
Net deferred tax assets | 112,922,000 | 109,967,000 | |
Less valuation allowance | -112,553,000 | -109,565,000 | |
Deferred tax assets | 369,000 | 402,000 | |
Deferred tax liabilities: | |||
Acquired intangible assets | -369,000 | -402,000 | |
Net deferred tax assets (liabilities) | 0 | 0 | |
Valuation Allowance | |||
Increase in valuation allowance | 2,988,000 | 5,100,000 | |
Valuation allowance for deferred tax assets allocated to continuing operations | 111,813,000 | ||
Valuation allowance for deferred tax assets allocated to additional paid-in-capital for amounts attributable to exercises of employee stock options | $740,000 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes | |||
Net operating loss | $16,000,000 | ||
Gross unrecognized tax benefits | 0 | 0 | 0 |
Amount of uncertain tax position | 0 | ||
Safend | |||
Income Taxes | |||
Net operating loss | 316,802,000 | ||
Safend, Inc. | |||
Income Taxes | |||
Net operating loss | $8,074,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Royalty Liability | |||||||||||
Accretion of royalty liability | $97,300 | $81,400 | $67,500 | ||||||||
Loss per common share - basic and diluted (in dollars per share) | $0.07 | $0.05 | $0.09 | $0.09 | $0.11 | $0.09 | $0.12 | $0.39 | $0.30 | $0.68 | $1.41 |
Safend | |||||||||||
Royalty Liability | |||||||||||
Royalty rate (as a percent) | 3.50% | ||||||||||
Royalty liability | 5,157,306 | 4,673,629 | 5,157,306 | 4,673,629 | |||||||
Royalties payable, undiscounted amount | 6,200,000 | 6,235,000 | 6,200,000 | 6,235,000 | |||||||
Amount repaid to OCS | 193,623 | 183,000 | |||||||||
Additional grants received from OCS | 0 | 80,000 | |||||||||
Accretion of royalty liability | 97,300 | 81,000 | |||||||||
Immaterial Error Related to Royalty Liability for Grants Received [Member] | |||||||||||
Royalty Liability | |||||||||||
Quantifying misstatement in current year financial statements, amount | $580,000 | $580,000 | |||||||||
Loss per common share - basic and diluted (in dollars per share) | $0.01 | $0.01 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) | |||
2015 | $1,091 | ||
2016 | 423 | ||
2017 | 13 | ||
2018 | 2 | ||
Total minimum lease payments | 1,529 | ||
Leases Operating Expense | |||
Rent expense | $1,142 | $1,123 | $1,143 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2014 | Sep. 16, 2013 | Sep. 16, 2013 | Dec. 31, 2012 | |
Related Party Transactions | |||||
Value of shares issued to acquire a perpetual license under the agreement | $500,000 | ||||
EXO5 | |||||
Related Party Transactions | |||||
Maintenance Costs | 417,000 | ||||
Class A Common Stock | EXO5 | |||||
Related Party Transactions | |||||
Number of shares issued to acquire a perpetual license under the agreement | 372,578 | 372,578 | |||
Value of shares issued to acquire a perpetual license under the agreement | 500,000 | 500,000 | |||
Peter Sprague | |||||
Related Party Transactions | |||||
Salary paid | 134,200 | 127,197 | 134,200 | ||
Bonus earned | 0 | 0 | 30,000 | ||
Michael Sprague | |||||
Related Party Transactions | |||||
Salary paid | 189,300 | 39,494 | 189,300 | ||
Bonus earned | 0 | 0 | 45,000 | ||
Board of Directors Fees [Member] | Steven Sprague | |||||
Related Party Transactions | |||||
Board fees earned | $45,000 |
Defined_Contribution_Plan_Deta
Defined Contribution Plan (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Compensation and Retirement Disclosure [Abstract] | |||
Employer discretionary matching contribution | $0 | $0 | $0 |
Disclosures_about_the_Fair_Val1
Disclosures about the Fair Value of Financial Instruments (Details) (Recurring basis, Level 1, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Recurring basis | Level 1 | ||
Disclosures about the Fair Value of Financial Instruments | ||
Overnight money market funds | $1,188 | $1,417 |
Segment_Reporting_Details
Segment Reporting (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
segment | segment | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 1 | 2 |
Segment_Reporting_Details_2
Segment Reporting (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Segment Reporting | |||||||||||
Total net revenues | $2,866,371 | $4,332,104 | $4,439,820 | $5,332,539 | $5,613,559 | $6,251,325 | $6,742,242 | $5,793,726 | $16,970,834 | $24,400,852 | $28,844,513 |
Revenue | Geographic area | |||||||||||
Segment Reporting | |||||||||||
% of Total | 100.00% | 100.00% | 100.00% | ||||||||
Revenue | Geographic area | United States of America | |||||||||||
Segment Reporting | |||||||||||
% of Total | 66.00% | 67.00% | 73.00% | ||||||||
Revenue | Geographic area | Europe | |||||||||||
Segment Reporting | |||||||||||
% of Total | 26.00% | 26.00% | 23.00% | ||||||||
Revenue | Geographic area | Asia | |||||||||||
Segment Reporting | |||||||||||
% of Total | 8.00% | 7.00% | 4.00% | ||||||||
Long-lived assets | Geographic area | United States of America | |||||||||||
Segment Reporting | |||||||||||
% of Total | 90.00% | ||||||||||
Long-lived assets | Geographic area | ISRAEL | |||||||||||
Segment Reporting | |||||||||||
% of Total | 10.00% | ||||||||||
EMBASSY digital security products and services | |||||||||||
Segment Reporting | |||||||||||
Total net revenues | 16,970,834 | 24,400,852 | 28,842,513 | ||||||||
EMBASSY digital security products and services | United States of America | |||||||||||
Segment Reporting | |||||||||||
Total net revenues | 11,251,506 | 16,267,661 | 21,187,703 | ||||||||
EMBASSY digital security products and services | Europe | |||||||||||
Segment Reporting | |||||||||||
Total net revenues | 4,381,551 | 6,364,707 | 6,549,013 | ||||||||
EMBASSY digital security products and services | Asia | |||||||||||
Segment Reporting | |||||||||||
Total net revenues | $1,337,777 | $1,768,484 | $1,105,797 |
Selected_Quarterly_Financial_D2
Selected Quarterly Financial Data (unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Selected quarterly financial data (unaudited) | |||||||||||
Revenues | $2,866,371 | $4,332,104 | $4,439,820 | $5,332,539 | $5,613,559 | $6,251,325 | $6,742,242 | $5,793,726 | $16,970,834 | $24,400,852 | $28,844,513 |
Cost of net revenues | 303,601 | 333,828 | 338,519 | 312,828 | 313,310 | 471,200 | 579,466 | 2,332,960 | |||
Loss from operations | -4,366,992 | -2,077,621 | -3,754,279 | -3,246,930 | -3,611,657 | -2,895,031 | -3,432,071 | -10,157,219 | -13,445,822 | -20,095,978 | -33,764,682 |
Net loss | ($3,685,704) | ($2,105,859) | ($3,795,530) | ($3,293,505) | ($3,676,389) | ($2,943,823) | ($3,490,297) | ($10,213,755) | ($12,880,598) | ($20,324,264) | ($33,962,548) |
Net loss per common share - basic and diluted (in dollars per share) | ($0.07) | ($0.05) | ($0.09) | ($0.09) | ($0.11) | ($0.09) | ($0.12) | ($0.39) | ($0.30) | ($0.68) | ($1.41) |