Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Feb. 28, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'FALCONSTOR SOFTWARE INC | ' | ' |
Entity Central Index Key | '0000922521 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $57,532,591 |
Entity Common Stock, Shares Outstanding | ' | 48,031,737 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $19,288,340 | $18,651,468 |
Restricted cash | 750,000 | 750,000 |
Marketable securities | 8,073,108 | 10,530,942 |
Accounts receivable, net of allowances of $276,302 and $940,101, respectively | 11,150,323 | 14,130,302 |
Prepaid expenses and other current assets | 1,636,891 | 2,796,665 |
Inventory | 919,390 | 642,819 |
Deferred tax assets, net | 358,092 | 464,031 |
Total current assets | 42,176,144 | 47,966,227 |
Property and equipment, net of accumulated depreciation of $16,022,230 and $16,131,570, respectively | 3,317,344 | 3,980,679 |
Deferred tax assets, net | 49,651 | 86,465 |
Software development costs, net | 1,796,075 | 1,161,822 |
Other assets | 1,549,255 | 2,185,148 |
Goodwill | 4,150,339 | 4,150,339 |
Other intangible assets, net | 179,596 | 174,426 |
Total assets | 53,218,404 | 59,705,106 |
Current liabilities: | ' | ' |
Accounts payable | 1,024,180 | 2,801,372 |
Accrued expenses | 8,658,863 | 16,720,582 |
Deferred tax liabilities, net | 18,005 | 0 |
Deferred revenue, net | 18,148,268 | 17,831,653 |
Total current liabilities | 27,849,316 | 37,353,607 |
Liabilities, Noncurrent [Abstract] | ' | ' |
Other long-term liabilities | 617,300 | 2,618,818 |
Deferred tax liabilities, net | 193,705 | 167,875 |
Deferred revenue, net | 11,602,177 | 6,311,865 |
Total liabilities | 40,262,498 | 46,452,165 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock - $.001 par value, 100,000,000 shares authorized, 56,036,972 and 55,615,972 shares issued, respectively and 48,031,737 and 47,610,737 shares outstanding, respectively | 56,037 | 55,616 |
Additional paid-in capital | 166,683,726 | 162,673,833 |
Accumulated deficit | -111,842,709 | -100,910,119 |
Common stock held in treasury, at cost (8,005,235 and 8,005,235 shares, respectively) | -46,916,339 | -46,916,339 |
Accumulated other comprehensive loss, net | -1,762,387 | -1,650,050 |
Total stockholders' equity | 6,218,328 | 13,252,941 |
Total liabilities and stockholders' equity | 53,218,404 | 59,705,106 |
Series A redeemable convertible preferred stock | ' | ' |
Liabilities, Noncurrent [Abstract] | ' | ' |
Series A redeemable convertible preferred stock, $.001 par value, 2,000,000 shares authorized, 900,000 shares issued and outstanding, redemption value of $9,000,000 | $6,737,578 | $0 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Allowances on accounts receivable | $276,302 | $940,101 |
Accumulated depreciation on Property and equipment | 16,022,230 | 16,131,570 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Temporary Equity, Shares Issued | 900,000 | 0 |
Temporary Equity, Shares Outstanding | 900,000 | 0 |
Temporary Equity, Redemption Value | $9,000,000 | $0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 56,036,972 | 55,615,972 |
Common stock, shares outstanding | 48,031,737 | 47,610,737 |
Common Stock, held in treasury, shares | 8,005,235 | 8,005,235 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Revenues: | ' | ' | ' |
Product revenues | $27,338,557 | $41,358,621 | $49,470,139 |
Support and services revenues | 31,297,947 | 34,052,348 | 33,400,463 |
Total revenues | 58,636,504 | 75,410,969 | 82,870,602 |
Cost of revenues: | ' | ' | ' |
Product | 4,155,413 | 8,215,152 | 8,386,864 |
Support and service | 11,000,401 | 12,446,921 | 13,130,045 |
Total cost of revenues | 15,155,814 | 20,662,073 | 21,516,909 |
Gross profit | 43,480,690 | 54,748,896 | 61,353,693 |
Operating expenses | ' | ' | ' |
Research and development costs | 15,613,543 | 18,950,084 | 21,508,712 |
Selling and marketing | 25,222,954 | 35,694,899 | 39,288,694 |
General and administrative | 12,265,038 | 13,334,475 | 11,696,512 |
Investigation, litigation, and settlement related costs (benefits) | 373,619 | -326,408 | 10,257,388 |
Restructuring costs | 3,606,020 | 770,749 | 822,320 |
Total operating expenses | 57,081,174 | 68,423,799 | 83,573,626 |
Operating loss | -13,600,484 | -13,674,903 | -22,219,933 |
Interest and other income (loss), net | 1,094,126 | -523,011 | 59,982 |
Loss before income taxes | -12,506,358 | -14,197,914 | -22,159,951 |
(Benefit)/Provision for income taxes | -1,573,768 | 786,407 | 1,208,332 |
Net loss | -10,932,590 | -14,984,321 | -23,368,283 |
Less: Accrual of preferred stock dividends | 216,379 | 0 | 0 |
Less: Accretion to redemption value of Series A preferred stock | 127,504 | 0 | 0 |
Net loss attributable to common stockholders | ($11,276,473) | ($14,984,321) | ($23,368,283) |
Earnings per share | ' | ' | ' |
Basic net loss per share attributable to common stockholders (in dollars per share) | ($0.24) | ($0.32) | ($0.50) |
Diluted net loss per share attributable to common stockholders (in dollars per share) | ($0.24) | ($0.32) | ($0.50) |
Weighted average basic shares outstanding (in shares) | 47,979,467 | 47,408,995 | 46,648,928 |
Weighted average diluted shares outstanding (in shares) | 47,979,467 | 47,408,995 | 46,648,928 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Statement of Comprehensive Income [Abstract] | ' | ' | ' |
Net loss | ($10,932,590) | ($14,984,321) | ($23,368,283) |
Other comprehensive income (loss), net of taxes/benefits: | ' | ' | ' |
Foreign currency translation | -92,767 | -152,075 | -279,898 |
Net unrealized (loss) gain on marketable securities | -2,800 | 90,000 | 20,201 |
Net minimum pension liability | -16,770 | 129,445 | 67,891 |
Total other comprehensive (loss) income, net of taxes/benefits: | -112,337 | 67,370 | -191,806 |
Total comprehensive loss | -11,044,927 | -14,916,951 | -23,560,089 |
Less: Accrual of preferred stock dividends | 216,379 | 0 | 0 |
Less: Accretion to redemption value of Series A preferred stock | 127,504 | 0 | 0 |
Total comprehensive loss attributable to common stockholders | ($11,388,810) | ($14,916,951) | ($23,560,089) |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common stock | Additional paid-in capital | Accumulated deficit | Treasury stock | Accumulated other comprehensive income | Stockholders' equity |
Beginning Balance, amount at Dec. 31, 2010 | ' | $54,147 | $150,884,184 | ($62,557,515) | ' | ($1,525,614) | ' |
Exercise of stock awards | ' | 784 | 919,322 | ' | ' | ' | ' |
Accretion of Series A redeemable convertible preferred stock | 0 | ' | ' | ' | ' | ' | ' |
Dividends on Series A redeemable convertible preferred stock | 0 | ' | ' | ' | ' | ' | ' |
Share-based compensation to non-employees | ' | ' | 24,369 | ' | ' | ' | ' |
Share-based compensation to employees | ' | ' | 5,493,689 | ' | ' | ' | ' |
Net loss | -23,368,283 | ' | ' | -23,368,283 | ' | ' | ' |
Other comprehensive (loss) income, net | ' | ' | ' | ' | ' | -191,806 | ' |
Ending Balance, amount at Dec. 31, 2011 | ' | 54,931 | 157,321,564 | -85,925,798 | -46,916,339 | -1,717,420 | 22,816,938 |
Exercise of stock awards | ' | 685 | 737,500 | ' | ' | ' | ' |
Accretion of Series A redeemable convertible preferred stock | 0 | ' | ' | ' | ' | ' | ' |
Dividends on Series A redeemable convertible preferred stock | 0 | ' | ' | ' | ' | ' | ' |
Share-based compensation to non-employees | ' | ' | 27,487 | ' | ' | ' | ' |
Share-based compensation to employees | ' | ' | 4,587,282 | ' | ' | ' | ' |
Net loss | -14,984,321 | ' | ' | -14,984,321 | ' | ' | ' |
Other comprehensive (loss) income, net | ' | ' | ' | ' | ' | 67,370 | ' |
Ending Balance, amount at Dec. 31, 2012 | ' | 55,616 | 162,673,833 | -100,910,119 | -46,916,339 | -1,650,050 | 13,252,941 |
Exercise of stock awards | ' | 421 | 697,081 | ' | ' | ' | ' |
Beneficial conversion feature | ' | ' | 1,951,266 | ' | ' | ' | ' |
Accretion of Series A redeemable convertible preferred stock | -127,504 | ' | -127,504 | ' | ' | ' | ' |
Dividends on Series A redeemable convertible preferred stock | -216,379 | ' | -216,379 | ' | ' | ' | ' |
Share-based compensation to non-employees | ' | ' | 37,379 | ' | ' | ' | ' |
Share-based compensation to employees | ' | ' | 1,668,050 | ' | ' | ' | ' |
Net loss | -10,932,590 | ' | ' | -10,932,590 | ' | ' | ' |
Other comprehensive (loss) income, net | ' | ' | ' | ' | ' | -112,337 | ' |
Ending Balance, amount at Dec. 31, 2013 | ' | $56,037 | $166,683,726 | ($111,842,709) | ($46,916,339) | ($1,762,387) | $6,218,328 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Cash flows from operating activities: | ' | ' | ' |
Net loss | ($10,932,590) | ($14,984,321) | ($23,368,283) |
Adjustments to reconcile net loss to net cash from operating activities: | ' | ' | ' |
Depreciation and amortization | 2,660,826 | 3,314,360 | 4,107,761 |
Share-based payment compensation | 1,668,050 | 4,587,282 | 5,493,689 |
Non-cash professional services expenses | 37,379 | 27,487 | 24,369 |
Restructuring costs | 3,606,020 | 770,749 | 822,320 |
Payment of restructuring costs | -2,300,005 | -770,271 | -702,276 |
Realized gain on marketable securities | -826 | -905 | 0 |
Impairment of cost method investments | 0 | 10,725 | 41,780 |
Gain on sale of cost method investment | -2,096,364 | 0 | 0 |
Provision for returns and doubtful accounts | -294,074 | 357,301 | 120,992 |
Deferred income tax provision | 110,203 | -83,350 | -160,434 |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable | 3,327,614 | 4,849,209 | 3,830,769 |
Prepaid expenses and other current assets | 1,129,742 | -889,278 | -333,732 |
Inventory | -276,571 | 1,126,188 | -359,348 |
Other assets | -95,052 | 31,837 | 48,135 |
Accounts payable | -1,809,000 | -101,784 | 1,446,111 |
Accrued expenses and other long-term liabilities | -11,758,230 | -660,906 | 8,550,746 |
Deferred revenue | 5,887,953 | -2,852,793 | 3,576,167 |
Net cash (used in) provided by operating activities | -11,134,925 | -5,268,470 | 3,138,766 |
Cash flows from investing activities: | ' | ' | ' |
Sales of marketable securities | 33,982,164 | 32,332,954 | 22,098,206 |
Purchases of marketable securities | -31,527,129 | -21,267,582 | -24,101,138 |
Proceeds from sale of cost method investment | 3,000,000 | 0 | 0 |
Transfer to restricted cash | 0 | -750,000 | 0 |
Purchases of property and equipment | -1,536,167 | -2,487,128 | -2,220,380 |
Capitalized software development costs | -973,842 | -461,555 | -1,001,025 |
Security deposits | -244,814 | -29,746 | -48,238 |
Purchase of intangible assets | -128,122 | -101,642 | -127,890 |
Net cash provided by (used in) investing activities | 2,572,090 | 7,235,301 | -5,400,465 |
Cash flows from financing activities: | ' | ' | ' |
Proceeds from exercise of stock options | 697,500 | 738,184 | 920,106 |
Proceeds from issuance of Series A preferred stock, net of issuance costs | 8,731,677 | 0 | 0 |
Net cash provided by financing activities | 9,429,177 | 738,184 | 920,106 |
Effect of exchange rate changes on cash and cash equivalents | -229,470 | -311,241 | -243,268 |
Net increase (decrease) in cash and cash equivalents | 636,872 | 2,393,774 | -1,584,861 |
Cash and cash equivalents, beginning of period | 18,651,468 | 16,257,694 | 17,842,555 |
Cash and cash equivalents, end of period | 19,288,340 | 18,651,468 | 16,257,694 |
Supplemental Disclosures: | ' | ' | ' |
Cash paid/(refund received) for income taxes, net | 95,593 | 688,167 | 1,221,294 |
Non-cash financing activities: | ' | ' | ' |
Less: Accrual of preferred stock dividends | $216,379 | $0 | $0 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||
Summary of Significant Accounting Policies | |||||||||||||
(a) | The Company and Nature of Operations | ||||||||||||
FalconStor Software, Inc., a Delaware Corporation (the "Company"), develops, manufactures and sells data migration, business continuity, disaster recovery, optimized backup and de-duplication solutions and provides the related maintenance, implementation and engineering services. | |||||||||||||
(b) | Principles of Consolidation | ||||||||||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||
(c) | Reclassifications | ||||||||||||
Certain prior year’s amounts have been reclassified to conform to the current year presentation. Certain costs previously recorded within “selling and marketing” are now presented within “research and development costs” to better align these costs with functions performed. | |||||||||||||
(d) | Use of Estimates | ||||||||||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, accounts receivable allowances, share-based payment compensation, cost-based investments, marketable securities, valuation of embedded derivatives, software development costs, goodwill and other intangible assets and income taxes. Actual results could differ from those estimates. | |||||||||||||
The financial market volatility, both in the U.S. and in many other countries where the Company operates, has impacted and may continue to impact the Company’s business. Such conditions could have a material impact to the Company’s significant accounting estimates discussed above. | |||||||||||||
(e) | Cash Equivalents, Restricted Cash and Marketable Securities | ||||||||||||
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company records its cash equivalents and marketable securities at fair value in accordance with the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on fair value measurements and disclosures. As of December 31, 2013 the Company’s cash equivalents consisted of money market funds and commercial paper. As of December 31, 2012, the Company’s cash equivalents consisted of money market funds. At December 31, 2013 and 2012, the fair value of the Company’s cash equivalents amounted to approximately $8.5 million and $4.3 million, respectively. | |||||||||||||
As of December 31, 2013 and December 31, 2012, the Company had $0.8 million of restricted cash. The restricted cash serves as collateral related to deposit service indebtedness with the Company’s commercial bank. As of December 31, 2013 and 2012, the Company did not have any deposit service indebtedness with the Company’s bank. | |||||||||||||
As of December 31, 2013 and 2012, the Company’s marketable securities consisted of corporate bonds and government securities. As of December 31, 2013 and 2012, the fair value of the Company’s marketable securities was approximately $8.1 million and $10.5 million, respectively. All of the Company’s marketable securities are classified as available-for-sale, and accordingly, unrealized gains and losses on marketable securities, net of tax, are reflected as a component of accumulated other comprehensive loss in stockholders’ equity. Any other-than-temporary impairments are recorded within interest and other income (loss), net in the consolidated statement of operations. See Note (3) Marketable Securities for additional information. | |||||||||||||
(f) | Fair Value of Financial Instruments | ||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows: | |||||||||||||
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. | |||||||||||||
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. | |||||||||||||
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. | |||||||||||||
As of December 31, 2013 and 2012, the fair value of the Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated carrying value due to the short maturity of these instruments. See Note (4) Fair Value Measurements for additional information. | |||||||||||||
(g) | Derivative Financial Instruments | ||||||||||||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible preferred stock are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815 “Derivatives and Hedging” (“ASC 815”) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivatives are required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. | |||||||||||||
(h) | Revenue Recognition | ||||||||||||
The Company derives its revenue from sales of its products, support and services. Product revenue consists of the Company’s software integrated with industry standard hardware and sold as complete turn-key integrated solutions. Product revenue also consists of stand-alone software applications. Support and services revenue consists of both maintenance revenues and professional services revenues. Revenue is recorded net of applicable sales taxes. | |||||||||||||
In accordance with the authoritative guidance issued by the FASB on revenue recognition, the Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, the fee is fixed and determinable, the product is delivered, and collection of the resulting receivable is deemed probable. Products delivered to a customer on a trial basis are not recognized as revenue until a permanent key code is delivered to the customer. Reseller customers typically send the Company a purchase order when they have an end user identified. Distributor customers typically send the Company a purchase order when they have a reseller and end user identified. For bundled arrangements that include either maintenance or both maintenance and professional services, the Company uses the residual method to determine the amount of product revenue to be recognized. Under the residual method, consideration is allocated to the undelivered elements based upon vendor-specific objective evidence (“VSOE”) of the fair value of those elements, with the residual of the arrangement fee allocated to and recognized as product revenue. If VSOE does not exist for all undelivered elements of an arrangement, the Company recognizes total revenue from the arrangement ratably over the term of the maintenance agreement. The Company's long-term portion of deferred revenue consists of (i) payments received for maintenance contracts with terms in excess of one year as of the balance sheet date, (ii) payments received for product sales bundled with multiple years of maintenance but for which VSOE did not exist for all undelivered elements of the arrangement, and (iii) payments received in connection with the Company's joint development agreement in 2013 which the Company does not anticipate recognizing into revenue within the next twelve months. The Company provides an allowance for product returns as a reduction of revenue, based upon historical experience and known or expected trends. | |||||||||||||
Revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract. Revenues associated with software implementation and software engineering services are recognized when the services are performed. Costs of providing these services are included in cost of support and services. | |||||||||||||
The Company has entered into various distribution, licensing and joint promotion agreements with OEMs, whereby the Company has provided to the OEM a non-exclusive software license to install the Company’s software on certain hardware or to resell the Company’s software in exchange for payments based on the products distributed by these OEMs. Such payments from the OEM or distributor are recognized as revenue in the period reported by the OEM. | |||||||||||||
From time to time the Company will enter into funded software development arrangements. Under such arrangements, revenue recognition will not commence until final delivery and/or acceptance of the product. For arrangements where the Company has VSOE for the undelivered elements, the Company will follow the residual method and recognize product revenue upon final delivery and/or acceptance of the product. For arrangements where the Company does not have VSOE for the undelivered elements, the Company will recognize the entire arrangement fee ratably commencing at the time of final delivery and/or acceptance through the end of the service period in the arrangement. | |||||||||||||
(i) | Property and Equipment | ||||||||||||
Property and equipment are recorded at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets (3 to 7 years). Leasehold improvements are amortized on a straight-line basis over the terms of the respective leases or over their estimated useful lives, whichever is shorter. | |||||||||||||
(j) | Goodwill and Other Intangible Assets | ||||||||||||
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations. The Company has not amortized goodwill related to its acquisitions, but instead tests the balance for impairment. The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. The Company tests goodwill for impairment by first comparing the book value of net assets to the fair value of the reporting unit. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. | |||||||||||||
The Company’s annual impairment assessment is performed during the fourth quarter of each year, and the Company has determined there to be no impairment for any of the periods presented. Based on the Company’s analysis, the fair value of its reporting unit substantially exceeds the carrying value of its goodwill balances as of December 31, 2013 and 2012. Identifiable intangible assets include (i) assets acquired through business combinations, which include customer contracts and intellectual property, and (ii) patents amortized over three years using the straight-line method. | |||||||||||||
For the years ended December 31, 2013, 2012 and 2011, amortization expense was $122,951, $118,789 and $323,540, respectively. The gross carrying amount and accumulated amortization of other intangible assets as of December 31, 2013 and 2012 are as follows: | |||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||
Goodwill | $ | 4,150,339 | $ | 4,150,339 | |||||||||
Other intangible assets: | |||||||||||||
Gross carrying amount | $ | 3,256,709 | $ | 3,128,588 | |||||||||
Accumulated amortization | (3,077,113 | ) | (2,954,162 | ) | |||||||||
Net carrying amount | $ | 179,596 | $ | 174,426 | |||||||||
As of December 31, 2013, amortization expense for existing identifiable intangible assets is expected to be $97,933, $58,797 and $22,866 for the years ended December 31, 2014, 2015 and 2016, respectively. Such assets will be fully amortized at December 31, 2016. | |||||||||||||
(k) | Software Development Costs and Purchased Software Technology | ||||||||||||
In accordance with the authoritative guidance issued by the FASB on costs of software to be sold, leased, or marketed, costs associated with the development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility of the product has been established. Based on the Company’s product development process, technological feasibility is established upon completion of a working model. Amortization of software development costs is recorded at the greater of the straight-line basis over the product’s estimated life, or the ratio of current period revenue of the related products to total current and anticipated future revenue of these products. During the years ended December 31, 2013, 2012 and 2011, the Company recorded $339,589, $301,263 and $140,326, respectively, of amortization expense related to capitalized software costs. The gross carrying amount and accumulated amortization of software development costs as of December 31, 2013 and 2012 are as follows: | |||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||
Software development costs: | |||||||||||||
Gross carrying amount | 2,718,900 | 1,745,058 | |||||||||||
Accumulated amortization | (922,825 | ) | (583,236 | ) | |||||||||
Software development costs, net | 1,796,075 | 1,161,822 | |||||||||||
As of December 31, 2013, amortization expense for software development costs is expected to be $487,284, $487,284, $409,595, $228,481 and $183,431 for the years ended December 31, 2014, 2015, 2016, 2017 and 2018, respectively. Such assets will be fully amortized at December 31, 2018. | |||||||||||||
(l) | Income Taxes | ||||||||||||
The Company records income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 realized 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. In determining the period in which related tax benefits are realized for financial reporting purposes, excess share-based compensation deductions included in net operating losses are realized after regular net operating losses are exhausted. | |||||||||||||
The Company accounts for uncertain tax positions in accordance with the authoritative guidance issued by the FASB on income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return, should be recorded in the financial statements. Pursuant to the authoritative guidance, the Company may recognize the tax benefit from an uncertain tax position only if it meets the “more likely than not” threshold that the position will be sustained on examination by the taxing authority, based on the technical merits of the position or expiration of statutes. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. In addition, the authoritative guidance addresses de-recognition, classification, interest and penalties on income taxes, accounting in interim periods, and also requires increased disclosures. The Company includes interest and penalties related to its uncertain tax positions as part of income tax expense within its consolidated statement of operations. See Note (6) Income Taxes for additional information. | |||||||||||||
(m) | Long-Lived Assets | ||||||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. | |||||||||||||
(n) | Share-Based Payments | ||||||||||||
The Company accounts for share-based payments in accordance with the authoritative guidance issued by the FASB on share-based compensation, which establishes the accounting for transactions in which an entity exchanges its equity instruments for goods or services. Under the provisions of the authoritative guidance, share-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period), net of estimated forfeitures. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model. The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical experience. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. All share-based awards are expected to be fulfilled with new shares of common stock. See Note (10) Share-Based Payment Arrangements for additional information. | |||||||||||||
(o) | Foreign Currency | ||||||||||||
Assets and liabilities of foreign operations are translated at rates of exchange at the end of the period, while results of operations are translated at average exchange rates in effect for the period. Gains and losses from the translation of foreign assets and liabilities from the functional currency of the Company’s subsidiaries into the U.S. dollar are classified as accumulated other comprehensive loss in stockholders’ equity. Gains and losses from foreign currency transactions are included in the consolidated statements of operations within interest and other income (loss), net. | |||||||||||||
During the years ended December 31, 2013, 2012 and 2011, foreign currency transactional losses totaled approximately $1,073,000, $653,000 and $78,000, respectively. | |||||||||||||
(p) | Earnings Per Share (EPS) | ||||||||||||
Basic EPS is computed based on the weighted average number of shares of common stock outstanding. Diluted EPS is computed based on the weighted average number of common shares outstanding increased by dilutive common stock equivalents, attributable to stock option awards, restricted stock awards, restricted stock unit awards and Series A redeemable convertible preferred stock outstanding. Due to the net loss for the years ended December 31, 2013, 2012 and 2011, all common stock equivalents, totaling 16,931,548, 11,532,032 and 14,982,611, respectively, were excluded from diluted net loss per share because they were anti-dilutive. The common stock equivalents consist of 8,150,032 of outstanding stock options and restricted stock awards and 8,781,516 related to outstanding Series A redeemable convertible preferred stock for the year ended December 31, 2013 and 11,532,032 and 14,982,611 of outstanding stock option and restricted stock awards for the years ended December 31, 2012 and December 31, 2011, respectively. | |||||||||||||
The following represents a reconciliation of the numerators and denominators of the basic and diluted EPS computation: | |||||||||||||
Year Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Numerator: | |||||||||||||
Net Loss | $ | (10,932,590 | ) | $ | (14,984,321 | ) | $ | (23,368,283 | ) | ||||
Effects of redeemable convertible preferred stock: | |||||||||||||
Less: Preferred stock dividends | 216,379 | — | — | ||||||||||
Less: accretion to redemption value of series A preferred stock | 127,504 | — | — | ||||||||||
Net loss attributable to common stockholders | $ | (11,276,473 | ) | $ | (14,984,321 | ) | $ | (23,368,283 | ) | ||||
Denominator: | |||||||||||||
Basic Shares outstanding | 47,979,467 | 47,408,995 | 46,648,928 | ||||||||||
Effect of dilutive securities: | |||||||||||||
Stock options and restricted stock | — | — | — | ||||||||||
Preferred stock | — | — | — | ||||||||||
Diluted shares outstanding | 47,979,467 | 47,408,995 | 46,648,928 | ||||||||||
EPS: | |||||||||||||
Basic net loss per share attributable to common stockholders | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.50 | ) | ||||
Diluted net loss per share attributable to common stockholders | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.50 | ) | ||||
(q) | Investments | ||||||||||||
During December 2013, the Company sold its interest in Tianjin Zhongke Blue Whale Information Technologies Co., Ltd. (“Blue Whale”), a Chinese joint venture, for $3.0 million. The Company recorded a gain of $2,096,364 within "interest and other income (loss), net" in the accompanying consolidated statements of operations. As of December 31, 2013 the Company did not have any other cost-method investments. | |||||||||||||
As of December 31, 2012, the Company maintained certain cost-method investments totaling approximately $0.9 million, which are included within “other assets” in the accompanying consolidated balance sheets. During 2012 and 2011 the Company recognized impairment charges of approximately $11,000 and $42,000, respectively, related to certain of its cost-method investments as a result of other-than-temporary declines in market value related to certain of these investments. These charges are included within “interest and other income (loss), net” in the accompanying consolidated statements of operations. | |||||||||||||
(r) | Treasury Stock | ||||||||||||
The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. | |||||||||||||
(s) | New Accounting Pronouncements | ||||||||||||
In July 2013, the FASB issued new guidance which requires the netting of an unrecognized tax benefit, or a portion of an unrecognized tax benefit, against a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward if such settlement is required or expected in the event the uncertain tax position is disallowed. The new guidance is effective prospectively to all existing unrecognized tax benefits, but entities can choose to apply it retrospectively. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company will be the first quarter of 2014. We do not expect the adoption of the new guidance by the Company to have a material impact on our financial results. | |||||||||||||
In February 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance which requires companies to present information about reclassification adjustments from accumulated other comprehensive income in their financial statements or footnotes. The adoption of this new accounting guidance in the first quarter of 2013 did not have a material impact on our consolidated financial position, results of operations or cash flows. See Note (7) Accumulated Other Comprehensive Loss for the related disclosure. | |||||||||||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and Equipment | |||||||||
Property and equipment consist of the following: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Computer hardware and software | $ | 16,427,412 | $ | 16,626,381 | |||||
Furniture and equipment | 808,252 | 893,918 | |||||||
Leasehold improvements | 2,090,902 | 2,578,942 | |||||||
Automobile | 13,008 | 13,008 | |||||||
19,339,574 | 20,112,249 | ||||||||
Less accumulated depreciation | (16,022,230 | ) | (16,131,570 | ) | |||||
$ | 3,317,344 | $ | 3,980,679 | ||||||
During the years ended December 31, 2013 and 2012, the Company wrote off approximately $2,198,795 and $4,626,989, respectively, of fully depreciated assets and related accumulated depreciation, for book purposes only. Depreciation expense was $2,198,286, $2,894,308 and $3,643,895 in 2013, 2012 and 2011, respectively. |
Marketable_Securities
Marketable Securities | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||||||||||
Marketable Securities | ' | ||||||||||||
Marketable Securities | |||||||||||||
The Company’s marketable securities consist of available-for-sale securities, which are carried at fair value, with unrealized gains and losses reported as a separate component of stockholders’ equity. Unrealized gains and losses are computed on the specific identification method. Realized gains, realized losses and declines in value judged to be other-than-temporary, are included in interest and other income (loss), net. The cost of available-for-sale securities sold is based on the specific identification method and interest earned is included in interest and other income. | |||||||||||||
The cost and fair values of the Company’s available-for-sale marketable securities as of December 31, 2013, were as follows: | |||||||||||||
Aggregate | Cost or Amortized | Net Unrealized | |||||||||||
Fair Value | Cost | Gains | |||||||||||
Government securities | $ | 6,252,339 | $ | 6,249,483 | $ | 2,856 | |||||||
Corporate debt securities | 1,820,769 | 1,820,215 | 554 | ||||||||||
$ | 8,073,108 | $ | 8,069,698 | $ | 3,410 | ||||||||
The cost and fair values of the Company’s available-for-sale marketable securities as of December 31, 2012, were as follows: | |||||||||||||
Aggregate | Cost or Amortized | Net Unrealized | |||||||||||
Fair Value | Cost | Gains | |||||||||||
Government securities | $ | 8,328,392 | $ | 8,324,372 | $ | 4,020 | |||||||
Corporate debt securities | 2,202,550 | 2,200,360 | 2,190 | ||||||||||
$ | 10,530,942 | $ | 10,524,732 | $ | 6,210 | ||||||||
The cost and fair values of available-for-sale securities by contractual maturity as of December 31, 2013, were as follows: | |||||||||||||
Fair Value | Cost | ||||||||||||
Due within one year | $ | 7,161,703 | $ | 7,157,746 | |||||||||
Due after one year | 911,405 | 911,952 | |||||||||||
$ | 8,073,108 | $ | 8,069,698 | ||||||||||
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
The Company measures its cash equivalents, marketable securities and derivative instruments at fair value. Fair value is an exit price, representing the amount that would be received on the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. | |||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||
The methodology for measuring fair value specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company’s own assumptions of market participant valuation (unobservable inputs). As a result, observable and unobservable inputs have created the following fair value hierarchy: | |||||||||||||||||
• | Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities. The Level 1 category includes money market funds and commercial paper, which at December 31, 2013 and 2012 totaled $8.5 million and $4.3 million, respectively, which are included within “cash and cash equivalents” in the consolidated balance sheets. | ||||||||||||||||
• | Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly. The Level 2 category includes government securities and corporate debt securities, which at December 31, 2013 and 2012 totaled $8.1 million and $10.5 million, respectively, which are included within “marketable securities” in the consolidated balance sheets. | ||||||||||||||||
• | Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The Level 3 category includes derivatives, which at December 31, 2013 totaled $0.2 million and are included in "other long-term liabilities" in the consolidated balance sheets with the change in fair value from for the period included in "interest and other income (loss), net" in the consolidated statement of operations. There were no Level 3 derivatives at December 31, 2012. The Company did not hold any cash, cash equivalents or marketable securities categorized as Level 3 as of December 31, 2013 or 2012. | ||||||||||||||||
Measurement of Fair Value | |||||||||||||||||
The Company measures fair value as an exit price using the procedures described below for all assets and liabilities measured at fair value. When available, the Company uses unadjusted quoted market prices to measure fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon financial models that use, when possible, current market-based or independently-sourced market parameters such as interest rates and currency rates. Items valued using financial generated models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be inputs that are readily observable. If quoted market prices are not available, the valuation model used generally depends on the specific asset or liability being valued. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. | |||||||||||||||||
The fair value of the Company’s investments in corporate debt and government securities have been determined utilizing third party pricing services and verified by management. The pricing services use inputs to determine fair value which are derived from observable market sources including reportable trades, benchmark curves, credit spreads, broker/dealer quotes, bids, offers, and other industry and economic events. These investments are included in Level 2 of the fair value hierarchy. | |||||||||||||||||
The fair value of the Company’s derivatives were valued using the Black-Scholes pricing model adjusted for probability assumptions, with all significant inputs, except for the probability and volatility assumptions, derived from or corroborated by observable market data such as stock price and interest rates. The probability and volatility assumptions are both significant to the fair value measurement and unobservable. These derivatives are included in Level 3 of the fair value hierarchy. The Company’s valuation methodology for auction rate securities utilized a discounted cash flow analysis. During 2012, all auction rate notes were called by the issuer at par value. | |||||||||||||||||
Items Measured at Fair Value on a Recurring Basis | |||||||||||||||||
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2013: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Total | Quoted Prices in | Significant other | Significant | ||||||||||||||
Active Markets for | Inputs | Unobservable | |||||||||||||||
Identical Assets | (Level 2) | Inputs | |||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds and commercial paper | $ | 8,486,633 | $ | 8,486,633 | $ | — | $ | — | |||||||||
Total cash equivalents | 8,486,633 | 8,486,633 | — | — | |||||||||||||
Marketable securities: | |||||||||||||||||
Corporate debt and government securities | 8,073,108 | — | 8,073,108 | — | |||||||||||||
Total marketable securities | 8,073,108 | — | 8,073,108 | — | |||||||||||||
Derivative liabilities: | |||||||||||||||||
Derivative Instruments | 159,134 | — | — | 159,134 | |||||||||||||
Total derivative liabilities | 159,134 | — | — | 159,134 | |||||||||||||
Total assets and liabilities measured at fair value | $ | 16,718,875 | $ | 8,486,633 | $ | 8,073,108 | $ | 159,134 | |||||||||
The following table presents the Company’s assets that are measured at fair value on a recurring basis at December 31, 2012: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Total | Quoted Prices in | Significant other | Significant | ||||||||||||||
Active Markets for | Inputs | Unobservable | |||||||||||||||
Identical Assets | (Level 2) | Inputs | |||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds | $ | 4,285,309 | $ | 4,285,309 | $ | — | $ | — | |||||||||
Total cash equivalents | 4,285,309 | 4,285,309 | — | — | |||||||||||||
Marketable securities: | |||||||||||||||||
Corporate debt and government securities | 10,530,942 | — | 10,530,942 | — | |||||||||||||
Total marketable securities | 10,530,942 | — | 10,530,942 | — | |||||||||||||
Total assets measured at fair value | $ | 14,816,251 | $ | 4,285,309 | $ | 10,530,942 | $ | — | |||||||||
The following table presents the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of each of the years ended December 31, 2013 and 2012: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
Significant Unobservable Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||
Beginning Balance | $ | — | $ | 611,082 | |||||||||||||
Total unrealized gains in accumulated other comprehensive loss | — | 88,918 | |||||||||||||||
Securities called by issuer | — | (700,000 | ) | ||||||||||||||
Issuance of Derivative Instruments | 170,337 | — | |||||||||||||||
Total gains recognized in earnings | (11,203 | ) | — | ||||||||||||||
Ending Balance | $ | 159,134 | $ | — | |||||||||||||
Accrued_Expenses
Accrued Expenses | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Accrued Expenses | ' | ||||||||
Accrued Expenses | |||||||||
Accrued expenses are comprised of the following: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Accrued compensation | $ | 2,476,854 | $ | 4,052,253 | |||||
Accrued consulting and professional fees | 1,138,165 | 1,462,399 | |||||||
Accrued marketing and promotion | 91,045 | 182,412 | |||||||
Other accrued expenses | 705,083 | 1,270,598 | |||||||
Accrued income taxes | 300,627 | 295,115 | |||||||
Accrued other taxes | 993,096 | 1,172,007 | |||||||
Accrued hardware purchases | 1,100,051 | 1,221,930 | |||||||
Accrued and deferred rent | — | 76,069 | |||||||
Accrued restructuring costs | 1,280,628 | 478 | |||||||
Accrued investigation, litigation, and settlement costs | 356,935 | 6,987,321 | |||||||
Accrued preferred stock dividends | 216,379 | — | |||||||
$ | 8,658,863 | $ | 16,720,582 | ||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
Income Taxes | ' | ||||||||||||
Income Taxes | |||||||||||||
Information pertaining to the Company’s loss before income taxes and the applicable provision for income taxes is as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Loss before income taxes: | |||||||||||||
Domestic loss | $ | (13,466,322 | ) | $ | (15,356,162 | ) | $ | (24,181,349 | ) | ||||
Foreign income | 959,964 | 1,158,248 | 2,021,398 | ||||||||||
Total loss before income taxes: | (12,506,358 | ) | (14,197,914 | ) | (22,159,951 | ) | |||||||
(Benefit)/provision for income taxes: | |||||||||||||
Current: | |||||||||||||
Federal | $ | (1,823,192 | ) | $ | 105,198 | $ | 94,974 | ||||||
State and local | (209,079 | ) | 18,747 | 11,453 | |||||||||
Foreign | 348,300 | 745,812 | 1,262,339 | ||||||||||
(1,683,971 | ) | 869,757 | 1,368,766 | ||||||||||
Deferred: | |||||||||||||
Federal | $ | 14,875 | $ | 14,876 | $ | 14,876 | |||||||
State and local | 981 | 981 | 981 | ||||||||||
Foreign | 94,347 | (99,207 | ) | (176,291 | ) | ||||||||
110,203 | (83,350 | ) | (160,434 | ) | |||||||||
Total (benefit)/provision for income taxes: | $ | (1,573,768 | ) | $ | 786,407 | $ | 1,208,332 | ||||||
During 2013, the Company recorded a tax benefit of $1,573,768 related to the reversal of unrecognized tax benefits of $2,332,270 due to the expiration of applicable statutes of limitations partly offset by state and local and foreign taxes, withholding taxes on the gain on the sale of our cost-method investment and interest related to federal uncertain tax positions. | |||||||||||||
During 2012 and 2011, the Company recorded tax provisions of $786,407 and $1,208,332, respectively, related to state and local and foreign taxes. In computing the tax provision, expenses related to certain legal matters were determined to be non-deductible for US income tax purposes. | |||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | ||||||||||||
Deferred Tax Assets: | |||||||||||||
Allowance for receivables | $ | 103,085 | $ | 350,738 | |||||||||
Deferred revenue | 2,344,449 | 3,104,017 | |||||||||||
Share-based compensation | 4,032,431 | 6,236,175 | |||||||||||
Accrued expenses and other liabilities | 559,495 | 669,844 | |||||||||||
Domestic net operating loss carryforwards | 22,553,301 | 16,526,224 | |||||||||||
Foreign net operating loss carryforwards | 49,651 | 405,818 | |||||||||||
Tax credit carryforwards | 581,046 | 654,966 | |||||||||||
AMT tax credit carryforwards | 484,920 | 485,817 | |||||||||||
Capital loss carryforwards | 79,140 | 80,055 | |||||||||||
Fixed assets | 736,436 | 957,107 | |||||||||||
Intangibles | 2,643,806 | 3,195,185 | |||||||||||
Sub-total | 34,167,760 | 32,665,946 | |||||||||||
Valuation allowance | (33,870,014 | ) | (32,186,965 | ) | |||||||||
Total Deferred Tax Assets | $ | 297,746 | $ | 478,981 | |||||||||
Deferred Tax Liabilities: | |||||||||||||
Foreign withholding taxes | (101,713 | ) | (96,360 | ) | |||||||||
Total Deferred Tax Liabilities | $ | (101,713 | ) | $ | (96,360 | ) | |||||||
Net Deferred Tax Assets | $ | 196,033 | $ | 382,621 | |||||||||
During the year ended December 31, 2013 and 2012, the Company’s conclusion did not change with respect to its domestic deferred tax assets and, therefore, the Company has not recorded any benefit for its net domestic deferred tax assets for the full year 2013 or 2012. The reversal of the valuation allowance on deferred tax assets at December 31, 2013, would reduce income tax expense. As of December 31, 2013, the Company had federal net operating loss carryforwards of approximately $61,609,001 which are set to expire beginning in 2030 through 2033, if not utilized. | |||||||||||||
As of December 31, 2013, the Company had approximately $1,065,966 of various tax credit carryforwards, of which, approximately $574,997 related to research and development tax credit carryforwards. The research and development tax credits may be carried forward 20 years for federal tax purposes and are set to expire at various dates beginning in 2020 through 2029, if not utilized. The Company has recorded a full valuation allowance against all such carryforwards as of December 31, 2013. | |||||||||||||
The Company has not provided for the United States income or the foreign withholding taxes on the undistributed earnings of its subsidiaries operating outside of the United States, with the exception of China. It is the Company’s intention to reinvest those earnings permanently, and accordingly, it is not practicable to estimate the amount of tax that might be payable. | |||||||||||||
The effective tax rate before income taxes varies from the current statutory federal income tax rate as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Tax at Federal statutory rate | $ | (4,377,225 | ) | $ | (4,969,270 | ) | $ | (7,755,983 | ) | ||||
Increase (reduction) in income taxes resulting from: | |||||||||||||
State and local taxes | 8,948 | (3,130 | ) | (59 | ) | ||||||||
Non-deductible expenses | 25,295 | 50,070 | (25,071 | ) | |||||||||
Settlement costs | 56,882 | (553,700 | ) | 2,625,000 | |||||||||
Net effect of foreign operations | 552,855 | 259,592 | 530,630 | ||||||||||
Uncertain tax positions | (2,173,905 | ) | 140,625 | 118,351 | |||||||||
Change in valuation allowance | 4,333,382 | 5,862,220 | 5,715,464 | ||||||||||
$ | (1,573,768 | ) | $ | 786,407 | $ | 1,208,332 | |||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows: | |||||||||||||
2013 | 2012 | ||||||||||||
Balance at January 1, | $ | 2,085,484 | $ | 2,081,912 | |||||||||
Increases to tax positions taken in prior years | 13,034 | 3,572 | |||||||||||
Decreases to tax positions taken in prior years | — | — | |||||||||||
Increase for tax positions taken during the current year | 66,139 | — | |||||||||||
Expiration of statutes of limitation | (1,947,420 | ) | — | ||||||||||
Balance at December 31, | $ | 217,237 | $ | 2,085,484 | |||||||||
At December 31, 2013, $284,112 including interest, if recognized, would reduce the Company’s annual effective tax rate. As of December 31, 2013, the Company had approximately $66,875 of accrued interest. The Company does not expect any of its unrecognized tax benefits to reverse within the next 12 months. | |||||||||||||
The Company files federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2010 through 2013 tax years generally remain subject to examination by federal and most state tax authorities. In addition to the U.S., the Company’s major taxing jurisdictions include China, Taiwan, Japan, South Korea, France and Germany. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||
Accumulated Other Comprehensive Loss | ' | ||||||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||||||
The changes in Accumulated Other Comprehensive Loss, net of tax, for December 31, 2013 are as follows: | |||||||||||||||||
Foreign | Net | Net | Total | ||||||||||||||
Currency | Unrealized | Minimum | |||||||||||||||
Translation | Gains on | Pension | |||||||||||||||
Marketable | Liability | ||||||||||||||||
Securities | |||||||||||||||||
Accumulated other comprehensive (loss) income at January 1, 2013 | $ | (1,601,138 | ) | $ | 6,210 | $ | (55,122 | ) | $ | (1,650,050 | ) | ||||||
Other comprehensive (loss) income | |||||||||||||||||
Other comprehensive (loss) income before reclassifications | (92,767 | ) | (1,974 | ) | (25,320 | ) | (120,061 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive (loss) income | — | (826 | ) | 8,550 | 7,724 | ||||||||||||
Total other comprehensive (loss) income | (92,767 | ) | (2,800 | ) | (16,770 | ) | (112,337 | ) | |||||||||
Accumulated other comprehensive (loss) income at December 31, 2013 | $ | (1,693,905 | ) | $ | 3,410 | $ | (71,892 | ) | $ | (1,762,387 | ) | ||||||
For the year ended December 31, 2013, the amounts reclassified to net loss related to the Company’s defined benefit plan and sale of marketable securities. These amounts are included within “Operating loss" within the condensed consolidated statement of operations. |
Redeemable_Convertible_Preferr
Redeemable Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2013 | |
Equity [Abstract] | ' |
Redeemable Convertible Preferred Stock | ' |
Redeemable Convertible Preferred Stock | |
As of January 1, 2013 the Company was authorized to issue two million shares of $0.001 par value preferred stock. | |
On September 16, 2013, the Company issued to Hale Capital Partners, LP (“Hale”) 900,000 shares of the Company’s newly created Series A redeemable convertible preferred stock (the "redeemable convertible preferred stock"), par value $0.001 per share, at a price of $10 per share, for an aggregate purchase consideration of $9.0 million. Hale subsequently assigned and transferred all of its shares of the redeemable convertible preferred stock to HCP-FVA LLC. Each share of redeemable convertible preferred stock is convertible into common stock equivalents, at the option of the holder and upon certain mandatory conversion events described below, at a conversion rate of $1.02488 (as adjusted for stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and similar events). The Company received net proceeds of approximately $8,731,677 from the issuance of the redeemable convertible preferred stock, net of transaction costs. | |
If on or after the first anniversary of the issuance of the redeemable convertible preferred stock, the volume weighted average price of common stock for each trading day of any 60 consecutive trading days exceeds 250% of the conversion price and exceeds 225% of the conversion price through the conversion date, and certain equity conditions are met such that shares of common stock issued upon conversion can be immediately saleable by the redeemable convertible preferred stockholders, the Company can convert the redeemable convertible preferred stock up to an amount equal to the greater of 25% of the daily trading volume for the 20 consecutive trading days immediately preceding the conversion date or the amount of an identified bona fide block trade at a price reasonably acceptable to the applicable redeemable convertible preferred stockholder, but which price is not less than the arithmetic average of the weighted average prices of the common stock for the five trading days immediately preceding such sale. | |
Upon certain triggering events, such as bankruptcy, insolvency or a material adverse effect, failure to achieve minimum financial covenants or failure of the Company to issue shares upon conversion of the redeemable convertible preferred stock in accordance with its obligations, the redeemable convertible preferred stockholders may require the Company to redeem all or some of the redeemable convertible preferred stock at a price equal to the greater of 100% of the stated value plus accrued and unpaid dividends or the product of the number of shares of common stock underlying the redeemable convertible preferred stock and the closing price as of the occurrence of the triggering event. On or after August 5, 2017, each redeemable convertible preferred stockholder can require the Company to redeem its redeemable convertible preferred stock in cash at a price equal to 100% of the stated value being redeemed plus accrued and unpaid dividends. If the Company does not have the funds necessary to redeem the Series A redeemable convertible preferred stock, the dividends accruing on any outstanding Series A redeemable convertible preferred stock will increase to prime plus 10% (from prime plus 5%). For each six months that the Series A redeemable convertible preferred stock remains unredeemed, the dividend rate increases by 1%, subject to a maximum dividend rate of 19%. In addition, the Company's failure to redeem the redeemable convertible preferred stock would be considered a “Breach Event” under the agreements with the holders of the redeemable convertible preferred stock. If a Breach Event were to occur, then, under the agreements with the holders of our redeemable convertible preferred stock, the Company's Board of Directors would automatically be increased, with the holders of the redeemable convertible preferred stock having the right to appoint the new directors, so that the holders of the redeemable convertible preferred stock would have appointed a majority of the Board of Directors. This would give the holders of the Series A redeemable convertible preferred stock control of the Company. As of December 31, 2013, there were no triggering events that would allow the redeemable convertible preferred stockholders to require the Company to redeem any of the redeemable convertible preferred stock and the Company does not expect to incur any triggering events in fiscal 2014. | |
The Purchase Agreement provided that the Company must use commercially reasonable efforts to file a registration statement with the SEC within 90 days for the resale of all of the common stock issuable on the conversion of the Preferred Stock and as dividends. On December 2, 2013 the registration statement was declared effective by the Securities and Exchange Commission. The Purchase Agreement also contains other representations, warranties and financial and non-financial covenants, customary for an issuance of Preferred Stock in a private placement of this nature. The Company was in compliance with the non-financial covenants as of December 31, 2013. There were no financial covenants to comply with during 2013. The Company does not expect to incur any triggering events in fiscal 2014; however, if certain financial covenants are not met over the next twelve months, the Company would work on addressing any financial measures needed to remedy the failed covenants as well as work with the holders of the Series A redeemable convertible preferred stock on obtaining waivers as applicable. | |
Holders of the redeemable convertible preferred stock are entitled to receive quarterly dividends at the Prime Rate (Wall Street Journal Eastern Edition) plus 5% (up to a maximum amount of 10%), payable in cash, provided, that if the Company will not have at least $1.0 million in positive cash flow for any calendar quarter after giving effect to the payment of such dividends, the Company can pay such dividends in part in cash and the remainder can be accrued or paid in common stock to the extent certain equity conditions are satisfied. | |
Each share of redeemable convertible preferred stock has a vote equal to the number of shares of common stock into which the redeemable convertible preferred stock would be convertible as of the record date. The Company’s closing stock price on the record date was $1.23 which results in voting power of 7,317,073 shares. In addition, holders of a majority of the redeemable convertible preferred stock must approve certain actions, including any amendments to the Company's charter or bylaws that adversely affects the voting powers, preferences or other rights of the redeemable convertible preferred stock; payment of dividends or distributions; any liquidation, capitalization, reorganization or any other fundamental transaction of the Company; issuance of any equity security senior to or in parity with the redeemable convertible preferred stock as to dividend rights, redemption rights, liquidation preference and other rights; issuances of equity below the conversion price; any liens or borrowings other than non-convertible indebtedness from standard commercial lenders which does not exceed 80% of the company’s accounts receivable; and the redemption or purchase of any capital stock of the Company. | |
The Company has classified the redeemable convertible preferred stock as temporary equity in the financial statements as it is subject to redemption at the option of the holder under certain circumstances. As a result of the Company’s analysis of all the embedded conversion and put features within the preferred stock, the contingent redemption put options in the redeemable convertible preferred stock were determined to not be clearly and closely related to the debt-type host and also did not meet any other scope exceptions for derivative accounting. Therefore the contingent redemption put options are being accounted for as derivative instruments and the fair value of these derivative instruments were bifurcated from the redeemable convertible preferred stock and recorded as a liability. These derivative instruments were determined, in the aggregate, to have a fair value of $170,337 at the time of issuance of the preferred stock and were recorded as a reduction to preferred stock. This discount will be accreted to the redeemable convertible preferred stock using the effective interest method through the stated redemption date of August 5, 2017, which represents the earliest redemption date of the instrument. As of December 31, 2013 the fair value of these derivative instruments was $159,134. The change in fair value of these derivative instruments of $11,203 was included in “Interest and other income (loss), net” within the consolidated statement of operations. | |
A beneficial conversion feature (“BCF”) is recorded when the consideration allocated to a convertible security, divided by the number of common shares into which the security converts, is below the fair value of the common stock at the commitment date. The Company’s common stock price on the date one day prior to the closing of the Preferred Stock Agreement (the commitment date) was $1.23 per share, which was $0.21 greater than the conversion price of the redeemable convertible preferred stock. As the closing stock price on the commitment date was greater than the conversion price, the Company recognized a BCF. The Company allocated $1,951,266 to the BCF through an increase to additional paid-in capital and a corresponding decrease to the preferred stock. The resulting additional discount to the preferred stock is also being accreted to the redeemable convertible preferred stock using the effective interest method through the stated redemption date of August 5, 2017, which represents the earliest redemption date of the instrument. | |
The Company included a deduction of $127,504 as an adjustment to net loss attributable to common stockholders on the statement of operations and in determining loss per share for the year ended December 31, 2013. This amount represents the accretion of the transaction costs of $268,323, BCF of $1,951,266 and fair value allocated to the embedded derivatives of $170,337 for 2013. The Company also included a deduction of $216,379 as an adjustment to net loss attributable to common shareholders on the statement of operations and in determining loss per share for the year ended December 31, 2013 for accrued dividends for the preferred stock. These dividends were paid on January 2, 2014. |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2013 | |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
Stockholders’ Equity | |
Stock Repurchase Activity | |
At various times from October 2001 through February 2009, the Company’s Board of Directors has authorized the repurchase of up to 14 million shares of the Company’s outstanding common stock in the aggregate. The repurchases may be made from time to time in open market transactions in such amounts as determined at the discretion of the Company’s management. The terms of the stock repurchases are determined by management based on market conditions. | |
During the years ended December 31, 2013 and 2012, the Company did not repurchase any shares of its common stock. Since October 2001, the Company has repurchased a total of 8,005,235 shares of its common stock at an aggregate purchase price of $46,916,339. As of December 31, 2013, the Company had the authorization to repurchase 5,994,765 shares of its common stock based upon its judgment and market conditions. |
ShareBased_Payment_Arrangement
Share-Based Payment Arrangements | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Share Based Payment Arrangements | ' | |||||||||||||
Share-Based Payment Arrangements | ||||||||||||||
The following table summarizes the plans under which the Company was able to grant equity compensation as of December 31, 2013: | ||||||||||||||
Name of Plan | Shares | Shares Available | Shares | Last Date for Grant | ||||||||||
Authorized | for Grant | Outstanding | of Shares | |||||||||||
FalconStor Software, Inc., 2006 Incentive Stock Plan | 13,455,546 | 4,191,329 | 6,603,865 | May 17, 2016 | ||||||||||
FalconStor Software, Inc., 2013 Outside Directors Equity Compensation Plan | 400,000 | 350,000 | 50,000 | May 9, 2016 | ||||||||||
On July 1, 2013, the total shares available for issuance under the FalconStor Software, Inc., 2006 Incentive Stock Plan (the “2006 Plan”) totaled 1,169,323. Pursuant to the 2006 Plan, as amended, if, on July 1st of any calendar year in which the 2006 Plan is in effect, the number of shares of stock as to which options, restricted shares and restricted stock units may be granted under the 2006 Plan is less than five percent (5)% of the number of outstanding shares of stock, then the number of shares of stock available for issuance under the 2006 Plan is automatically increased so that the number equals five percent (5)% of the shares of stock outstanding. In no event shall the number of shares of stock subject to the 2006 Plan in the aggregate exceed twenty million shares, subject to adjustment as provided in the 2006 Plan. On July 1, 2013, the total number of outstanding shares of the Company’s common stock totaled 48,014,717. Pursuant to the 2006 Plan, as amended, the total shares available for issuance under the 2006 Plan thus increased by 1,231,413 shares from 1,169,323 to 2,400,736 shares available for issuance as of July 1, 2013. | ||||||||||||||
The following table summarizes the Company’s equity plans that have expired but that still have equity awards outstanding as of December 31, 2013: | ||||||||||||||
Name of Plan | Shares Available for Grant | Shares Outstanding | ||||||||||||
FalconStor Software, Inc., 2000 Stock Option Plan | — | 1,140,667 | ||||||||||||
2004 Outside Directors Stock Option Plan | — | 145,000 | ||||||||||||
FalconStor Software, Inc., 2007 Outside Directors Equity Compensation Plan | — | 160,000 | ||||||||||||
FalconStor Software, Inc., 2010 Outside Directors Equity Compensation Plan | — | 50,500 | ||||||||||||
All outstanding options granted under the Company’s equity plans have terms of ten years | ||||||||||||||
A summary of the Company’s stock option activity for 2013 is as follows: | ||||||||||||||
Number of | Weighted | Weighted | Aggregate | |||||||||||
Options | Average | Average | Intrinsic | |||||||||||
Exercise | Remaining | Value | ||||||||||||
Price | Contractual | |||||||||||||
Life (Years) | ||||||||||||||
Options Outstanding at December 31, 2012 | 11,360,842 | $ | 4.66 | 6.46 | $ | 497,695 | ||||||||
Granted | 2,034,500 | $ | 1.43 | |||||||||||
Exercised | (310,000 | ) | $ | 2.25 | ||||||||||
Forfeited | (5,178,050 | ) | $ | 4.13 | ||||||||||
Expired | (362,860 | ) | $ | 6.69 | ||||||||||
Options Outstanding at December 31, 2013 | 7,544,432 | $ | 4.16 | 6.28 | $ | 3,000 | ||||||||
Options Exercisable at December 31, 2013 | 4,836,007 | $ | 5.41 | 4.87 | $ | — | ||||||||
Options Expected to Vest after December 31, 2013 (1) | 1,895,898 | $ | 1.93 | 8.8 | $ | 2,100 | ||||||||
(1) Options expected to vest after December 31, 2013 reflect an estimated forfeiture rate | ||||||||||||||
Stock option exercises are fulfilled with new shares of common stock. The total cash received from stock option exercises for the years ended December 31, 2013, 2012 and 2011 was $697,500, $738,184 and $920,106, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $121,819, $273,935 and $422,136, respectively. | ||||||||||||||
The Company recognized share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the consolidated statement of operations: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Cost of revenues - Product | $ | 181 | $ | 262 | $ | 2,960 | ||||||||
Cost of revenues - Support and Service | 136,975 | 172,707 | 461,735 | |||||||||||
Research and development costs | 363,296 | 727,826 | 1,302,129 | |||||||||||
Selling and marketing | 397,967 | 1,677,469 | 2,023,370 | |||||||||||
General and administrative | 807,010 | 2,036,505 | 1,727,864 | |||||||||||
$ | 1,705,429 | $ | 4,614,769 | $ | 5,518,058 | |||||||||
The Company did not recognize any tax benefits related to share-based compensation expense during the years ended December 31, 2013, 2012 and 2011. | ||||||||||||||
The Company has the ability to issue both restricted stock and restricted stock units. The fair value of the restricted stock awards and restricted stock units are expensed at either (i) the fair value per share at date of grant (directors, officers and employees), or (ii) the fair value per share as of each reporting period (non-employee consultants). A summary of the total stock-based compensation expense related to restricted stock awards and restricted stock units, which is included in the Company’s total share-based compensation expense for each respective year, is as follows: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Directors, officers and employees | $ | 257,843 | $ | 584,959 | $ | 1,358,107 | ||||||||
Non-employee consultants | — | 13,488 | 21,882 | |||||||||||
$ | 257,843 | $ | 598,447 | $ | 1,379,989 | |||||||||
As of December 31, 2013, an aggregate of 3,426,068 shares of restricted stock had been issued, of which, 2,342,837 had vested and 477,631 had been forfeited. As of December 31, 2012, an aggregate of 2,876,068 shares of restricted stock had been issued, of which, 2,231,837 had vested and 473,041 had been forfeited. As of December 31, 2011, an aggregate of 2,821,054 shares of restricted stock had been issued, of which, 1,854,007 had vested and 446,990 had been forfeited. | ||||||||||||||
As of December 31, 2013 and 2012, an aggregate of 90,412 restricted stock units had been issued, of which, 79,065 had vested and 11,347 had been forfeited. As of December 31, 2011, an aggregate of 90,412 restricted stock units had been issued, of which, 73,580 had vested and 11,000 had been forfeited. | ||||||||||||||
A summary of the Company’s restricted stock activity for 2013 is as follows: | ||||||||||||||
Number of Restricted Stock Awards | ||||||||||||||
Non-Vested at December 31, 2012 | 171,190 | |||||||||||||
Granted | 550,000 | |||||||||||||
Vested | (111,000 | ) | ||||||||||||
Forfeited | (4,590 | ) | ||||||||||||
Non-Vested at December 31, 2013 | 605,600 | |||||||||||||
Restricted stock and restricted stock units are fulfilled with new shares of common stock. The total intrinsic value of restricted stock for which the restrictions lapsed during the years ended December 31, 2013, 2012 and 2011 was $202,797, $1,119,103 and $1,941,382, respectively. | ||||||||||||||
Options granted to non-employee consultants have exercise prices equal to the fair market value of the stock on the date of grant and a contractual term of ten years. Restricted stock awards granted to non-employee consultants have a contractual term equal to the lapse of restriction(s) of each specific award. Vesting periods for share-based awards granted to non-employee consultants range from immediate vesting to three years depending on service requirements. A summary of the total stock-based compensation expense/(benefit) related to share-based awards granted to non-employee consultants, which is included in the Company’s total share-based compensation expense for each respective period, is as follows: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Non-qualified stock options | $ | 37,379 | $ | 13,999 | $ | 2,487 | ||||||||
Restricted stock awards | — | 13,488 | 21,882 | |||||||||||
$ | 37,379 | $ | 27,487 | $ | 24,369 | |||||||||
The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model. The Company believes that this valuation technique and the approach utilized to develop the underlying assumptions are appropriate in estimating the fair value of the Company’s share-based payments granted during the years ended December 31, 2013, 2012 and 2011. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards. | ||||||||||||||
The per share weighted average fair value of share-based payments granted during the years ended December 31, 2013, 2012 and 2011 was $0.84, $1.36 and $2.11, respectively. In addition to the exercise and grant date prices of the awards, certain weighted average assumptions that were used to estimate the fair value of share-based payment grants in the respective periods are listed in the table below: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Expected dividend yield | 0% | 0% | 0% | |||||||||||
Expected volatility | 61 - 64% | 60 - 61% | 56 - 61% | |||||||||||
Risk-free interest rate | 0.84 - 1.64% | 0.7 - 1.2% | 1.0 - 2.5% | |||||||||||
Expected term (years) | 5.5 | 5.5 | 5.5 | |||||||||||
Discount for post-vesting restrictions | N/A | N/A | N/A | |||||||||||
Options granted to officers, employees and directors during fiscal 2013, 2012, and 2011 have exercise prices equal to the fair market value of the stock on the date of grant, a contractual term of ten years, and a vesting period generally of three years. Based on each respective group’s historical vesting experience and expected trends, the estimated forfeiture rate for officers, employees, and directors, as adjusted, for fiscal 2013 was 30%, 30% and 0%, respectively. For both fiscal years 2012 and 2011, the estimated forfeiture rate for officers, employees, and directors, as adjusted, was 11%, 24% and 0%, respectively. The impact of the change in the forfeiture rates from 2012 to 2013 was a reduction to share-based compensation expense of $84,008. | ||||||||||||||
The Company estimates expected volatility based primarily on historical daily volatility of the Company’s stock and other factors, if applicable. The risk-free interest rate is based on the United States treasury yield curve in effect at the time of grant. The expected option term is the number of years that the Company estimates that options will be outstanding prior to exercise. The expected term of the awards was determined based upon an estimate of the expected term of “plain vanilla” options as prescribed in SEC Staff Accounting Bulletin (“SAB”) No. 110. | ||||||||||||||
As of December 31, 2013, there was approximately $2,148,113 total unrecognized compensation cost related to the Company’s unvested stock options, restricted stock and restricted stock unit awards granted under the Company’s stock plans. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.88 years. | ||||||||||||||
As of December 31, 2013, the Company had 12,691,361 shares of common stock reserved for issuance upon the exercise of stock options, restricted stock and restricted stock units. |
Inventories
Inventories | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Inventories | |||||||||
Inventories consist of component materials and finished systems. Inventories are stated at the lower of cost (first-in, first-out) or market, not in excess of net realizable value. Component material consists of certain key replacement parts for the finished systems. Inventories are as follows: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Component materials | $ | 10,073 | $ | 18,989 | |||||
Finished systems | 909,317 | 623,830 | |||||||
Total Inventory | $ | 919,390 | $ | 642,819 | |||||
As of December 31, 2013 and 2012, the Company has not recorded any reserve for excess and/or obsolete inventories in arriving at estimated net realizable value of its inventory. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||
Dec. 31, 2013 | ||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||
Commitments and Contingencies | ' | |||
Commitments and Contingencies | ||||
During 2013, the Company signed a new operating lease covering its corporate office facility that expires in April 2021. The Company also has several operating leases related to offices in both the United States and foreign countries. The expiration dates for these leases range from 2014 through 2017. The following is a schedule of future minimum lease payments for all operating leases as of December 31, 2013: | ||||
2014 | $ | 2,595,765 | ||
2015 | 1,793,759 | |||
2016 | 1,520,711 | |||
2017 | 1,465,118 | |||
2018 | 1,459,190 | |||
Thereafter | 3,577,335 | |||
$ | 12,411,878 | |||
These leases require the Company to pay its proportionate share of real estate taxes and other common charges. Total rent expense for operating leases was $3,317,114, $3,229,294 and $3,054,817 for the years ended December 31, 2013, 2012 and 2011, respectively. | ||||
The Company typically provides its customers a warranty on its software products for a period of no more than 90 days. Such warranties are accounted for in accordance with the authoritative guidance issued by the FASB on contingencies. To date, the Company has not incurred any costs related to warranty obligations. | ||||
Under the terms of substantially all of its software license agreements, the Company has agreed to indemnify its customers for all costs and damages arising from claims against such customers based on, among other things, allegations that the Company’s software infringes the intellectual property rights of a third party. In most cases, in the event of an infringement claim, the Company retains the right to (i) procure for the customer the right to continue using the software; (ii) replace or modify the software to eliminate the infringement while providing substantially equivalent functionality; or (iii) if neither (i) nor (ii) can be reasonably achieved, the Company may terminate the license agreement and refund to the customer a pro-rata portion of the license fee paid to the Company. Such indemnification provisions are accounted for in accordance with the authoritative guidance issued by the FASB on guarantees. As of December 31, 2013 and 2012, there were no claims outstanding under such indemnification provisions. | ||||
Upon certain triggering events, such as bankruptcy, insolvency or a material adverse effect, failure to achieve minimum financial covenants or failure of the Company to issue shares upon conversion of the redeemable convertible preferred stock in accordance with its obligations, the redeemable convertible preferred stockholders may require the Company to redeem all or some of the redeemable convertible preferred stock at a price equal to the greater of 100% of the stated value plus accrued and unpaid dividends or the product of the number of shares of common stock underlying the redeemable convertible preferred stock and the closing price as of the occurrence of the triggering event. On or after August 5, 2017, each redeemable convertible preferred stockholder can require the Company to redeem its redeemable convertible preferred stock in cash at a price equal to 100% of the stated value being redeemed plus accrued and unpaid dividends. As of December 31, 2013, there were no triggering events that would allow the redeemable convertible preferred stockholders to require the Company to redeem any of the redeemable convertible preferred stock and the Company does not expect to incur any triggering events in fiscal 2014. However, if certain financial covenants are not met over the next twelve months, the Company would work on addressing any financial measures needed to remedy the failed covenants as well as work with the holders of the Series A redeemable convertible preferred stock on obtaining waivers as applicable. | ||||
On July 23, 2013, the Company entered into an Employment Agreement (“Quinn Employment Agreement”) with Gary Quinn. Pursuant to the Quinn Employment Agreement, the Company agreed to employ Mr. Quinn as President and Chief Executive Officer of the Company effective July 23, 2013 through July 22, 2015, at an annual salary of $400,000 per annum. The Quinn Employment Agreement also provides for the grant of 500,000 restricted shares which will vest over a two year period at 50% and 50% annually. The 500,000 restricted shares were granted to Mr. Quinn by the Company’s Compensation Committee on August 5, 2013. | ||||
In July, 2013, the Company signed a joint development agreement with Violin Memory under which Violin will pay the Company $12.0 million for licenses to certain of the Company's software and for further development of that software. The first two milestones under the contract were met during 2013 and as a result the Company received $6.0 million under that agreement during the 2013 and the Company has recorded this amount as long term deferred revenue as of December 31, 2013. Receipt of the final $6.0 million is broken into several payments and is contingent upon the Company's successful development of future versions of the software within a designated time period, which is expected to be completed during 2014. If the Company is unable to develop the software, the Company will not receive the additional payments. In addition, certain provisions of the joint development agreement could require the Company to return some or all of the money that the Company has already received. | ||||
From time to time, the Company has undertaken restructuring and expense control measures to support its business performance and to align the Company’s cost structure with its resources. During the third quarter of 2013, the Company adopted a restructuring plan intended to better align the Company’s cost structure with the skills and resources required to more effectively execute the Company’s long-term growth strategy and to support revenue levels we expect to achieve on a go forward basis (the “2013 Plan”). In connection with the 2013 Plan the Company eliminated over 100 positions worldwide, implemented tighter expense controls, ceased non-core activities and closed or downsized several facilities. The total amount incurred under the 2013 Plan, during the year, was $3.6 million of which $2.3 million was paid as of December 31, 2013. Actions under the 2013 Plan were substantially completed as of December 31, 2013; however, this is an ongoing initiative and the Company expects to incur additional restructuring costs in the first half of 2014. | ||||
On December 1, 2005, the Company adopted the 2005 FalconStor Software, Inc., Key Executive Severance Protection Plan, as amended (“Severance Plan”). Pursuant to the Severance Plan, the Company’s Chief Executive Officer, Chief Financial Officer and certain other key personnel are entitled to receive certain contingent benefits, as set forth in the Severance Plan, including lump sum payments and acceleration of stock option vesting, each in certain circumstances. |
Derivative_Financial_Instrumen
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2013 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' |
Derivative Financial Instruments | ' |
Derivative Financial Instruments | |
The Company from time to time will use derivative financial instruments, such as foreign currency forward contracts, as economic hedges to reduce exchange rate risks arising from the change in fair value of certain foreign currency denominated assets and liabilities (i.e., receivables and payables). The purpose of the Company’s foreign currency risk management program is to reduce volatility in earnings caused by exchange rate fluctuations. In accordance with the authoritative guidance issued by the FASB on derivatives and hedging, companies are required to recognize all of the derivative financial instruments as either assets or liabilities at fair value in their balance sheets. The Company does not use derivative financial instruments for trading or speculative purposes. | |
As of December 31, 2013, 2012 and 2011, the Company had no foreign currency forward contracts outstanding. The Company did not utilize foreign currency forward contracts during the years ended December 31, 2013, 2012 and 2011. | |
As a result of the Company’s analysis of all the embedded conversion and put features within its Series A redeemable convertible preferred stock, the contingent redemption put options in the redeemable convertible preferred stock were determined to not be clearly and closely related to the debt-type host and also did not meet any other scope exceptions for derivative accounting. Therefore the contingent redemption put options are being accounted for as derivative instruments and the fair value of these derivative instruments were bifurcated from the redeemable convertible preferred stock and recorded as a liability. These derivative instruments were determined, in the aggregate, to have a fair value of $170,337 at the time of issuance of the preferred stock and were recorded as a reduction to preferred stock. As of December 31, 2013 the fair value of these derivative instruments was $159,134. The change in fair value of these derivative instruments of $11,203 was included in “Interest and other income (loss), net” within the consolidated statement of operations. |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Litigation | ' |
Litigation | |
In view of the inherent difficulty of predicting the outcome of litigation, particularly where the claimants seek very large or indeterminate damages, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. | |
In accordance with the authoritative guidance issued by the FASB on contingencies, the Company accrues anticipated costs of settlement, damages and losses for claims to the extent specific losses are probable and estimable. The Company records a receivable for insurance recoveries when such amounts are probable and collectable. In such cases, there may be an exposure to loss in excess of any amounts accrued. If, at the time of evaluation, the loss contingency related to a litigation is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable and, the Company will expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, the Company will accrue the minimum amount of the range. | |
The Internal and Government Investigations | |
As previously disclosed, both the United States Attorney’s Office for the Eastern District of New York (“USAO”) and the Securities and Exchange Commission (“SEC”) commenced investigations of the Company in October, 2010, in response to the Company’s announcement that it had accepted the resignation of ReiJane Huai, its President and Chief Executive Officer, and the Chairman of its Board of Directors, following his disclosure to the Company that certain improper payments allegedly were made in connection with the Company’s licensing of software to one customer. | |
The Company conducted its own investigation into the matter and cooperated with the USAO and SEC investigations. | |
On June 27, 2012, the Company announced that it had entered into settlements with the USAO and the SEC. | |
The Company entered into a Deferred Prosecution Agreement (DPA) with the USAO. Under the DPA, the USAO agreed that it would defer prosecution of the Company in connection with the matter, and ultimately not prosecute the Company if the Company satisfies its obligations during the 18 month term of the DPA. That term expired on December 27, 2013. On January 31, 2014, the complaint filed by the USAO against the Company was dismissed with prejudice. The DPA acknowledged the remedial actions taken by the Company in response to its discovery of the improper payments and did not require the Company to make any additional control or compliance changes. Under the DPA, the Company forfeited $2.9 million over eighteen months. | |
The Company agreed with the SEC to the entry of a Consent Judgment (CJ) to settle a civil action filed by the SEC. Pursuant to the CJ, the Company agreed not to violate the anti-fraud and registration provisions of Sections 17(a)(2), 5(a) and 5(c) of the Securities Act of 1933, and the books and records provisions of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. The Company further agreed to pay a civil penalty of $2.9 million to the SEC. | |
The Company has no further obligations, for payment or otherwise, under its agreements with the USAO and with the SEC. | |
Stockholder Litigation | |
The Company is a defendant in a class action lawsuit brought in United Stated District Court for the Eastern District of New York, by Company shareholders (the “Class Action”). The other defendants are James Weber, our former CFO and Vice President for Operations, and the estate of ReiJane Huai. Mr. Huai was the Company’s former Chairman, President and CEO. | |
The Class Action complaint alleges that the defendants defrauded shareholders by falsely certifying in the Company’s SEC filings that they had disclosed any fraud, whether or not material, that involved management or other employees who had a significant role in the registrant’s internal control over financial reporting. The Class Action complaint alleges that the defendants were in fact aware of fraud. | |
In January, 2013, the parties to the Class Action reached an agreement in principle to settle the Class Action. In the fourth quarter of 2013, following preliminary approval of the settlement by the district court, we deposited $5.0 million into an escrow account, where it was held pending final settlement. On March 3, 2014 a final settlement hearing was held. There were no objections to the proposed settlement. The Magistrate Judge indicated that she would be filing a report and recommendation that the settlement be approved. However, there can be no assurance regarding if or when final approval of the settlement will be granted. | |
Company stockholders filed actions in the Suffolk County Division of the Supreme Court of the State of New York, putatively derivatively on behalf of the Company, against the Company, each of the Company’s Directors, Mr. Weber, Wayne Lam, a former Vice president of the Company, the estate of Mr. Huai, and Jason Lin, a former employee of the Company (the “Derivative Action”). The consolidated amended Derivative Action complaint alleged that the defendants breached their duties to the Company by: (1) causing or allowing the dissemination of false and misleading information; (2) failing to maintain internal controls; (3) failing to manage the Company properly; (4) unjustly enriching themselves; (5) abusing their control of the Company; and (6) wasting Company assets. | |
On March 5, 2013, the Suffolk County Division of the Supreme Court of the State of New York granted a motion made by all of the defendants in the Derivative Action, except Mr. Lin, and dismissed the Derivative Action as to all defendants other than Mr. Lin. The stockholders have filed a notice of appeal of the dismissal of the Derivative Action. The Company cannot predict when the appeal will be resolved or the ultimate outcome of the matter. Certain of the defendants may be entitled to indemnification by the Company under the laws of Delaware and/or the Company’s by-laws. | |
The Company has insurance policies that were purchased to cover, among other things, lawsuits like the Class Action and the Derivative Action. The Company’s Directors and Officers (“D&O”) Insurance, is composed of more than one layer, each layer written by a different insurance company. However, the events that gave rise to the claims in the Class Action and the Derivative Action caused the Company’s insurers to reserve their rights to disclaim, rescind, or otherwise not be obligated to provide coverage to the Company and certain other insureds under the policies. In light of these uncertainties, the Company has entered into settlements with two of its insurers. Pursuant to these settlements, the Company will not receive repayment of all amounts it might otherwise have received. | |
In October 2012 the Company entered into an agreement with the carrier of the first $5.0 million layer of the Company’s D&O insurance. Pursuant to this agreement, the Company accepted a payment of $3.9 million from the first layer insurance carrier in satisfaction of the carrier’s obligations to the Company under the first layer D&O insurance policy. In addition, as part of the October 2012 agreement with the carrier, the Company agreed to indemnify the carrier of the first layer of D&O insurance against potential claims by certain named insured persons under the first layer D&O insurance policy. The Company cannot predict the likelihood or the outcome of any such claims by the named insureds. | |
Because the carrier of the next layer of insurance would not be obligated to make payment to the Company until the full $5.0 million first layer limit had been exhausted, this means that the Company was responsible for $1.1 million out of pocket before it could again seek reimbursement from its insurers. We accrued for the $1.1 million during 2012. | |
On July 31, 2013 the Company entered into an agreement with the carrier of the second $5.0 million layer of the Company’s D&O insurance. Pursuant to the agreement, the insurer agreed to pay seventy five percent (75%) of the Company’s losses attributable to the Class Action and the Derivative Action above the first $5.25 million of such losses. In addition, as part of the July 31, 2013 agreement with the carrier, the Company agreed to indemnify the carrier of the second layer of D&O insurance against potential claims by certain named insured persons under the second layer D&O insurance. The Company cannot predict the likelihood or the outcome of any such claims by the named insureds. | |
While, at present, the Company does not believe that the amounts it will pay in connection with the Class Action and the Derivative Action will exceed the limits of the first two layers of its coverage, there can be no assurance that if the Company seeks recovery from the additional layers, the recovery the Company makes on the remainder of its insurance will be adequate to cover the costs of its defense or settlement of the Derivative Action, or the Class Action if the settlement is not approved, or any damages that might ultimately be awarded against the Company or anyone to whom the Company might owe indemnification if the appeal is successful. | |
The Company’s remaining insurers may deny coverage under the policies. If the plaintiffs are awarded damages and the Company’s insurance is not adequate to cover the amounts, or its insurers deny coverage, the amounts to be paid by the Company could have a significant negative impact on our financial results, our cash flow and our cash balances. | |
Since inception, the Company had recorded $7.2 million of total costs associated with the Class Action and the Derivative Actions. The Company has recorded a liability in the amount of $0.3 million in “accrued expenses” in the consolidated balance sheets as of December 31, 2013 which includes estimated legal fees for both the Class Action and the Derivative Action to date. As a result of the agreement reached with the Company’s D&O insurance carrier in the prior year, the Company recorded an insurance recovery in 2012 of approximately $3.9 million of legal expenses previously incurred related to the class action and derivative lawsuits as well as the potential settlement of the class action lawsuit. The $3.9 million insurance recovery was reimbursed by the Company’s insurance carrier during 2012. As a result of the agreement reached with the insurer of the Company’s next layer of D&O insurance, the Company recorded an insurance recovery of $0.5 million during 2013 of which $0.3 million was reimbursed by the Company's insurance carrier during 2013 and the remaining $0.2 million is recorded as a receivable in “prepaid expenses and other current assets” in the consolidated balance sheet as of December 31, 2013. | |
During 2013, the Company recorded $0.4 million of investigation, litigation and settlement related costs of net legal expenses related to the class action and derivative lawsuits and other settlement related activities that are not recoverable through insurance. | |
Avazpour Litigation | |
The Company was the defendant in an action brought by Avazpour Networking Services, Inc., and its former principals (collectively, “Avazpour”), in the United States District Court for the Eastern District of New York. Avazpour alleged that the Company gave grossly negligent advice in connection with an upgrade of Avazpour’s storage system resulting in damages to Avazpour and breached its contract with Avazpour. On March 13, 2013, the Court granted the Company’s motion to dismiss all of the claims except for the claim of breach of contract. In June, 2013, the Company and the Avazpour reached an agreement in principle to settle the claim for $250,000. As a result of the settlement, the action was dismissed on September 17, 2013. Pursuant to the Company’s insurance, the Company was responsible for the first $100,000 of costs associated with this action. That amount was paid during 2013. | |
The Estate of ReiJane Huai | |
On October 24, 2013, the Company filed a Petition against the Estate of ReiJane Huai (the “Estate”) in Surrogates Court, Nassau County, State of New York. Mr. Huai was the former Chairman, President and Chief Executive Officer of the Company. The Company believes that the Estate owns more than 10% of the voting stock of the Company. | |
The Petition alleges that Mr. Huai breached his fiduciary duties to the Company, breached his contracts with the Company, was unjustly enriched at the Company’s expense, and must repay legal fees advanced on Mr. Huai’s behalf by the Company. The Company demands payment of approximately $10 million from the Estate representing (1) wages and other compensation paid to Mr. Huai during the period that Mr. Huai was involved in the payment of bribes to a Company customer, and (2) legal fees advanced on behalf of Mr. Huai in connection with the criminal and regulatory investigations of the Company, and the civil litigation, arising out of the bribes. The legal fees were advanced under the indemnification provisions of the Company’s by-laws and pursuant to an undertaking to repay under certain conditions signed by Mr. Huai. | |
In January, 2014, the Estate moved for partial dismissal of the Petition on the grounds that Mr. Huai was entitled to indemnification. The Company has filed its opposition to the Estate’s motion. | |
Other Claims | |
The Company is subject to various legal proceedings and claims, asserted or unasserted, which arise in the ordinary course of business. While the outcome of any such matters cannot be predicted with certainty, such matters are not expected to have a material adverse effect on the Company’s financial condition or operating results. | |
The Company continues to assess certain litigation and claims to determine the amounts, if any, that the Company believes may be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact the Company’s financial results, its cash flows and its cash reserves. |
Restructuring_Costs
Restructuring Costs | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Restructuring and Related Activities [Abstract] | ' | ||||||||||||||||
Restructuring Costs | ' | ||||||||||||||||
Restructuring Costs | |||||||||||||||||
From time to time, the Company has undertaken restructuring and expense control measures to support its business performance and to align the Company’s cost structure with its resources. In the third quarter of 2013, the Company adopted a restructuring plan intended to better align the Company’s cost structure with the skills and resources required to more effectively execute the Company’s long-term growth strategy and to support revenue levels we expect to achieve on a go forward basis. In connection with the 2013 Plan the Company eliminated over 100 positions worldwide, implemented tighter expense controls, ceased non-core activities and closed or downsized several facilities. The 2013 Plan is expected to be completed during the first half of 2014. The total amount incurred under the 2013 Plan was $3.6 million of which $2.3 million was paid during 2013. Actions under the 2013 Plan were substantially completed as of December 31, 2013; however, this is an ongoing initiative and the Company expects to incur additional restructuring costs in the first half of 2014. | |||||||||||||||||
In July 2012, the Company undertook certain restructuring activities that included a workforce reduction of approximately 35 positions worldwide (the “2012 Plan”). These actions were intended to better align the Company’s cost structure with the skills and resources required to more effectively execute the Company’s long-term growth strategy and to support the anticipated revenue levels we expect to achieve on a go forward basis. The total amount incurred with respect to severance under the 2012 Plan was $0.8 million. Actions under the 2012 Plan were substantially completed during the third quarter of 2012. | |||||||||||||||||
Accrued restructuring costs as of December 31, 2013 associated with the 2013 and 2012 Plans are as follows: | |||||||||||||||||
Reconciliation of Aggregate Liability Recorded for | |||||||||||||||||
Restructuring Costs Under the 2013 Plan | |||||||||||||||||
31-Dec-12 | Provisions | Payments/ Utilization | 31-Dec-13 | ||||||||||||||
Severance related costs | $ | — | $ | 3,179,131 | $ | 2,067,554 | $ | 1,111,577 | |||||||||
Facility and other costs | — | 426,889 | 231,973 | 194,916 | |||||||||||||
Total Restructuring Costs | $ | — | $ | 3,606,020 | $ | 2,299,527 | $ | 1,306,493 | |||||||||
Reconciliation of Aggregate Liability Recorded for | |||||||||||||||||
Restructuring Costs Under the 2012 Plan | |||||||||||||||||
31-Dec-12 | Provisions | Payments | 31-Dec-13 | ||||||||||||||
Severance related costs | $ | 478 | $ | — | $ | 478 | $ | — | |||||||||
Accrued restructuring costs as of December 31, 2012 associated with the 2012 and 2011 Plans are as follows: | |||||||||||||||||
Reconciliation of Aggregate Liability Recorded for | |||||||||||||||||
Restructuring Costs Under the 2012 Plan | |||||||||||||||||
31-Dec-11 | Provisions | Payments/ Utilization | 31-Dec-12 | ||||||||||||||
Severance related costs | $ | — | $ | 770,749 | $ | 770,271 | $ | 478 | |||||||||
Reconciliation of Aggregate Liability Recorded for | |||||||||||||||||
Restructuring Costs Under the 2011 Plan | |||||||||||||||||
31-Dec-11 | Provisions | Payments | 31-Dec-12 | ||||||||||||||
Severance related costs | $ | 94,844 | $ | — | $ | 94,844 | $ | — | |||||||||
Facility and other costs | 25,200 | — | 25,200 | — | |||||||||||||
Total Restructuring Costs | $ | 120,044 | $ | — | $ | 120,044 | $ | — | |||||||||
The severance related liabilities and facility and other liabilities are included within “accrued expenses” and "accounts payable" in the accompanying consolidated balance sheet for 2013. The expenses under the 2013 Plan and the 2012 Plan are included within “restructuring costs” in the accompanying consolidated statements of operations. The remaining payments under the 2013 Plan are expected to be paid throughout 2014; however, there can be no assurance that all payments will be completed by that time. There were no remaining payments under the 2012 Plan as of December 31, 2013. |
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Compensation and Retirement Disclosure [Abstract] | ' | ||||||||
Employee Benefit Plans | ' | ||||||||
Employee Benefit Plans | |||||||||
Defined Contribution Plan | |||||||||
Effective July 2002, the Company established a voluntary savings and defined contribution plan (the “Plan”) under Section 401(k) of the Internal Revenue Code. This Plan covers all U.S. employees meeting certain eligibility requirements and allows participants to contribute a portion of their annual compensation. Employees are 100% vested in their own contributions. For the years ended December 31, 2013, 2012 and 2011, the Company did not make any contributions to the Plan. | |||||||||
Effective July 1, 2007, the Company, in accordance with the labor pension system in Taiwan, contributes 6% of salaries to individual pension accounts managed by the Bureau of Labor Insurance. The plan covers all Taiwan employees that elect the new pension system and all employees hired after July 1, 2005. For the years ended December 31, 2013, 2012 and 2011, the Company contributed approximately $115,000, $127,000 and $127,000, respectively. | |||||||||
Defined Benefit Plan | |||||||||
The Company has a defined benefit plan covering employees in Taiwan. The Company accounts for its defined benefit plan in accordance with the authoritative guidance issued by the FASB on retirement benefits, which requires the Company to recognize the funded status of its defined benefit plan in the accompanying consolidated balance sheet, with the corresponding adjustment to accumulated other comprehensive income, net of tax. | |||||||||
At December 31, 2013 and 2012, $71,892 and $55,122, respectively, is included in accumulated other comprehensive income for amounts that have not yet been recognized in net periodic pension cost. These amounts include the following: unrecognized transition obligation of $28,551 and $35,279 at December 31, 2013 and 2012, respectively, and unrecognized actuarial losses of $43,341 and $19,843 at December 31, 2013 and 2012, respectively. During 2013, the total amount recorded in other comprehensive income related to the pension plan was $16,770 (net of tax), which consisted of an actuarial loss of $21,985 and the recognition of $5,215 of transition obligations recognized during 2013 as a component of net periodic pension cost. The transition obligation and actuarial loss included in accumulated other comprehensive loss and expected to be recognized in net periodic pension cost for the year ended December 31, 2014, is $5,711 and $761 respectively. | |||||||||
Pension information for the years ended December 31, 2013 and 2012, is as follows: | |||||||||
2013 | 2012 | ||||||||
Accumulated benefit obligation | $ | 171,651 | $ | 160,279 | |||||
Changes in projected benefit obligation: | |||||||||
Projected benefit obligation at beginning of year | 269,760 | 366,158 | |||||||
Interest cost | 4,621 | 7,571 | |||||||
Actuarial loss (gain) | 23,517 | (126,282 | ) | ||||||
Benefits paid | — | — | |||||||
Service cost | — | 5,624 | |||||||
Currency translation and other | (9,053 | ) | 16,689 | ||||||
Projected benefit obligation at end of year | $ | 288,845 | $ | 269,760 | |||||
Changes in plan assets: | |||||||||
Fair value of plan assets at beginning of year | $ | 108,214 | $ | 92,651 | |||||
Actual return on plan assets | 1,277 | 792 | |||||||
Benefits paid | — | — | |||||||
Employer contributions | 8,909 | 9,911 | |||||||
Currency translation and other | (3,609 | ) | 4,860 | ||||||
Fair value of plan assets at end of year | $ | 114,791 | $ | 108,214 | |||||
Funded status | $ | 174,054 | $ | 161,546 | |||||
Components of net periodic pension cost: | |||||||||
Interest cost | $ | 4,621 | $ | 7,571 | |||||
Expected return on plan assets | (1,854 | ) | (1,916 | ) | |||||
Amortization of net loss | 5,783 | 11,159 | |||||||
Service cost | — | 5,624 | |||||||
Net periodic pension cost | $ | 8,550 | $ | 22,438 | |||||
The Company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. Company contributions of approximately $10,000 are expected to be made during 2014. Benefit payments of approximately $227,000 are expected to be paid in 2016 through 2023. | |||||||||
The Company utilized the following assumptions in computing the benefit obligation at December 31, 2013 and 2012 as follows: | |||||||||
Years ended December 31, | |||||||||
2013 | 2012 | ||||||||
Discount rate | 2.25 | % | 1.75 | % | |||||
Rate of increase in compensation levels | 3 | % | 3 | % | |||||
Expected long-term rate of return on plan assets | 2 | % | 1.75 | % |
Segment_Reporting_and_Concentr
Segment Reporting and Concentrations | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Segment Reporting | ' | ||||||||||||
Segment Reporting and Concentrations | |||||||||||||
The Company is organized in a single operating segment for purposes of making operating decisions and assessing performance. Revenues from the United States to customers in the following geographical areas for the years ended December 31, 2013, 2012 and 2011, and the location of long-lived assets as of December 31, 2013 and 2012, are summarized as follows: | |||||||||||||
Years ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Revenues: | |||||||||||||
Americas | $ | 22,538,045 | $ | 30,505,705 | $ | 36,227,426 | |||||||
Asia Pacific | 17,128,902 | 24,807,328 | 24,197,054 | ||||||||||
Europe, Middle East, Africa and Other | 18,969,557 | 20,097,936 | 22,446,122 | ||||||||||
Total Revenues | $ | 58,636,504 | $ | 75,410,969 | $ | 82,870,602 | |||||||
December 31, | |||||||||||||
2013 | 2012 | ||||||||||||
Long-lived assets: | |||||||||||||
Americas | $ | 9,712,675 | $ | 10,263,056 | |||||||||
Asia Pacific | 717,527 | 1,041,470 | |||||||||||
Europe, Middle East, Africa and Other | 612,058 | 434,353 | |||||||||||
Total long-lived assets | $ | 11,042,260 | $ | 11,738,879 | |||||||||
For the years ended December 31, 2013 and 2012, the Company had one customer that accounted for 14% and 11% of total revenues, respectively. For the year ended December 31, 2011, the Company did not have any customers that accounted for 10% or more of total revenues. As of December 31, 2013, the Company had one customer that accounted for 12% of the gross accounts receivable balance. As of December 31, 2012, the Company had one customer that accounted for 20% of gross accounts receivable balances. |
Valuation_and_Qualifying_Accou
Valuation and Qualifying Accounts Allowance for Returns and Doubtful Accounts | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Valuation and Qualifying Accounts [Abstract] | ' | ||||||||||||||
Valuation and Qualifying Accounts - Allowance for Returns and Doubtful Accounts | ' | ||||||||||||||
Valuation and Qualifying Accounts – Allowance for Returns and Doubtful Accounts | |||||||||||||||
Balance at | Charges (Benefits) to Expenses / | Balance at | |||||||||||||
Beginning of | End of | ||||||||||||||
Period Ended | Period | Revenues | Deductions | Period | |||||||||||
December 31, 2013 | $ | 940,101 | (294,074 | ) | 369,725 | $ | 276,302 | ||||||||
December 31, 2012 | $ | 1,723,679 | 357,301 | 1,140,879 | $ | 940,101 | |||||||||
December 31, 2011 | $ | 3,242,458 | 120,992 | 1,639,771 | $ | 1,723,679 | |||||||||
Note: Charges/(benefits) to the allowance for doubtful accounts are recorded within “general and administrative expenses” within the consolidated statements of operations. Charges/(benefits) to the return reserve for product and service are recorded within “product revenues” within the consolidated statements of operations. | |||||||||||||||
Due to cash collections of previously reserved accounts receivable balances, the Company recorded a benefit of less than $0.1 million, $0.7 million and $0.7 million during the years ended December 31, 2013, 2012 and 2011 respectively. These amounts are within “additions charged to expenses/revenues” above, and are included within revenues in each respective period in the accompanying consolidated statements of operations. |
Quarterly_Financial_Data_Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Quarterly Financial Information (Unaudited) | ' | ||||||||||||||||
Quarterly Financial Data (Unaudited) | |||||||||||||||||
The following is a summary of selected quarterly financial data for the years ended December 31, 2013 and 2012: | |||||||||||||||||
Quarter | |||||||||||||||||
2013 | First | Second | Third | Fourth | |||||||||||||
Revenue (a) | $ | 15,284,817 | $ | 13,974,139 | $ | 14,730,038 | $ | 14,647,510 | |||||||||
Gross profit | 10,976,760 | 10,149,045 | 10,961,078 | 11,393,807 | |||||||||||||
Net (loss) income attributable to common stockholders (c) | (4,380,445 | ) | (5,207,293 | ) | (2,265,599 | ) | 576,864 | ||||||||||
Basic net (loss) income per share attributable to common stockholders | (0.09 | ) | (0.11 | ) | (0.05 | ) | 0.01 | ||||||||||
Diluted net (loss) income per share attributable to common stockholders | (0.09 | ) | (0.11 | ) | (0.05 | ) | 0.01 | ||||||||||
Quarter | |||||||||||||||||
2012 | First | Second | Third | Fourth | |||||||||||||
Revenue (b) | $ | 19,368,072 | $ | 16,466,201 | $ | 17,089,013 | $ | 22,487,683 | |||||||||
Gross profit | 14,186,230 | 11,587,960 | 12,208,096 | 16,766,610 | |||||||||||||
Net loss attributable to common stockholders | (2,449,408 | ) | (6,620,586 | ) | (3,568,051 | ) | (2,346,276 | ) | |||||||||
Basic net loss per share attributable to common stockholders | (0.05 | ) | (0.14 | ) | (0.08 | ) | (0.05 | ) | |||||||||
Diluted net loss per share attributable to common stockholders | (0.05 | ) | (0.14 | ) | (0.08 | ) | (0.05 | ) | |||||||||
The sum of the quarterly net income (loss) per share amounts do not necessarily equal the annual amount reported, as per share amounts are computed independently for each quarter and the annual period based on the weighted average common shares outstanding in each period. | |||||||||||||||||
(a) | The Company recorded a benefit (expense) of approximately $0.1 million, $0.0 million, $0.0 million and $(0.1) million during the first, second, third and fourth quarters of 2013, respectively, representing the net impact from changes in accounts receivable allowances. These amounts are included within revenues in each respective period in the accompanying consolidated statements of operations. | ||||||||||||||||
(b) | The Company recorded a benefit (expense) of approximately $0.6 million, ($0.3) million, $0.2 million and $0.2 million during the first, second, third and fourth quarters of 2012, respectively, representing the net impact from changes in accounts receivable allowances. These amounts are included within revenues in each respective period in the accompanying consolidated statements of operations. | ||||||||||||||||
(c) | Net income in the fourth quarter of 2013 includes a gain on the sale of the Company's cost-method investment of $1.9 million, net of tax which was partly offset by restructuring charges of $1.3 million. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Principles of Consolidation | ' | ||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Reclassifications | ' | ||||||||
Reclassifications | |||||||||
Certain prior year’s amounts have been reclassified to conform to the current year presentation. Certain costs previously recorded within “selling and marketing” are now presented within “research and development costs” to better align these costs with functions performed. | |||||||||
Use of Estimates | ' | ||||||||
Use of Estimates | |||||||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, accounts receivable allowances, share-based payment compensation, cost-based investments, marketable securities, valuation of embedded derivatives, software development costs, goodwill and other intangible assets and income taxes. Actual results could differ from those estimates. | |||||||||
The financial market volatility, both in the U.S. and in many other countries where the Company operates, has impacted and may continue to impact the Company’s business. Such conditions could have a material impact to the Company’s significant accounting estimates discussed above. | |||||||||
Cash Equivalents, Restricted Cash and Marketable Securities | ' | ||||||||
Cash Equivalents, Restricted Cash and Marketable Securities | |||||||||
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company records its cash equivalents and marketable securities at fair value in accordance with the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on fair value measurements and disclosures. As of December 31, 2013 the Company’s cash equivalents consisted of money market funds and commercial paper. As of December 31, 2012, the Company’s cash equivalents consisted of money market funds. At December 31, 2013 and 2012, the fair value of the Company’s cash equivalents amounted to approximately $8.5 million and $4.3 million, respectively. | |||||||||
As of December 31, 2013 and December 31, 2012, the Company had $0.8 million of restricted cash. The restricted cash serves as collateral related to deposit service indebtedness with the Company’s commercial bank. As of December 31, 2013 and 2012, the Company did not have any deposit service indebtedness with the Company’s bank. | |||||||||
As of December 31, 2013 and 2012, the Company’s marketable securities consisted of corporate bonds and government securities. As of December 31, 2013 and 2012, the fair value of the Company’s marketable securities was approximately $8.1 million and $10.5 million, respectively. All of the Company’s marketable securities are classified as available-for-sale, and accordingly, unrealized gains and losses on marketable securities, net of tax, are reflected as a component of accumulated other comprehensive loss in stockholders’ equity. Any other-than-temporary impairments are recorded within interest and other income (loss), net in the consolidated statement of operations. See Note (3) Marketable Securities for additional information. | |||||||||
Fair Value of Financial Instruments | ' | ||||||||
Fair Value of Financial Instruments | |||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows: | |||||||||
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. | |||||||||
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. | |||||||||
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. | |||||||||
As of December 31, 2013 and 2012, the fair value of the Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated carrying value due to the short maturity of these instruments. See Note (4) Fair Value Measurements for additional information. | |||||||||
Derivative Financial Instruments | ' | ||||||||
Derivative Financial Instruments | |||||||||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible preferred stock are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815 “Derivatives and Hedging” (“ASC 815”) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivatives are required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. | |||||||||
Revenue Recognition | ' | ||||||||
Revenue Recognition | |||||||||
The Company derives its revenue from sales of its products, support and services. Product revenue consists of the Company’s software integrated with industry standard hardware and sold as complete turn-key integrated solutions. Product revenue also consists of stand-alone software applications. Support and services revenue consists of both maintenance revenues and professional services revenues. Revenue is recorded net of applicable sales taxes. | |||||||||
In accordance with the authoritative guidance issued by the FASB on revenue recognition, the Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, the fee is fixed and determinable, the product is delivered, and collection of the resulting receivable is deemed probable. Products delivered to a customer on a trial basis are not recognized as revenue until a permanent key code is delivered to the customer. Reseller customers typically send the Company a purchase order when they have an end user identified. Distributor customers typically send the Company a purchase order when they have a reseller and end user identified. For bundled arrangements that include either maintenance or both maintenance and professional services, the Company uses the residual method to determine the amount of product revenue to be recognized. Under the residual method, consideration is allocated to the undelivered elements based upon vendor-specific objective evidence (“VSOE”) of the fair value of those elements, with the residual of the arrangement fee allocated to and recognized as product revenue. If VSOE does not exist for all undelivered elements of an arrangement, the Company recognizes total revenue from the arrangement ratably over the term of the maintenance agreement. The Company's long-term portion of deferred revenue consists of (i) payments received for maintenance contracts with terms in excess of one year as of the balance sheet date, (ii) payments received for product sales bundled with multiple years of maintenance but for which VSOE did not exist for all undelivered elements of the arrangement, and (iii) payments received in connection with the Company's joint development agreement in 2013 which the Company does not anticipate recognizing into revenue within the next twelve months. The Company provides an allowance for product returns as a reduction of revenue, based upon historical experience and known or expected trends. | |||||||||
Revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract. Revenues associated with software implementation and software engineering services are recognized when the services are performed. Costs of providing these services are included in cost of support and services. | |||||||||
The Company has entered into various distribution, licensing and joint promotion agreements with OEMs, whereby the Company has provided to the OEM a non-exclusive software license to install the Company’s software on certain hardware or to resell the Company’s software in exchange for payments based on the products distributed by these OEMs. Such payments from the OEM or distributor are recognized as revenue in the period reported by the OEM. | |||||||||
From time to time the Company will enter into funded software development arrangements. Under such arrangements, revenue recognition will not commence until final delivery and/or acceptance of the product. For arrangements where the Company has VSOE for the undelivered elements, the Company will follow the residual method and recognize product revenue upon final delivery and/or acceptance of the product. For arrangements where the Company does not have VSOE for the undelivered elements, the Company will recognize the entire arrangement fee ratably commencing at the time of final delivery and/or acceptance through the end of the service period in the arrangement. | |||||||||
Property and Equipment | ' | ||||||||
Property and Equipment | |||||||||
Property and equipment are recorded at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets (3 to 7 years). Leasehold improvements are amortized on a straight-line basis over the terms of the respective leases or over their estimated useful lives, whichever is shorter. | |||||||||
Goodwill and Other Intangible Assets | ' | ||||||||
Goodwill and Other Intangible Assets | |||||||||
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations. The Company has not amortized goodwill related to its acquisitions, but instead tests the balance for impairment. The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. The Company tests goodwill for impairment by first comparing the book value of net assets to the fair value of the reporting unit. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. | |||||||||
The Company’s annual impairment assessment is performed during the fourth quarter of each year, and the Company has determined there to be no impairment for any of the periods presented. Based on the Company’s analysis, the fair value of its reporting unit substantially exceeds the carrying value of its goodwill balances as of December 31, 2013 and 2012. Identifiable intangible assets include (i) assets acquired through business combinations, which include customer contracts and intellectual property, and (ii) patents amortized over three years using the straight-line method. | |||||||||
For the years ended December 31, 2013, 2012 and 2011, amortization expense was $122,951, $118,789 and $323,540, respectively. The gross carrying amount and accumulated amortization of other intangible assets as of December 31, 2013 and 2012 are as follows: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Goodwill | $ | 4,150,339 | $ | 4,150,339 | |||||
Other intangible assets: | |||||||||
Gross carrying amount | $ | 3,256,709 | $ | 3,128,588 | |||||
Accumulated amortization | (3,077,113 | ) | (2,954,162 | ) | |||||
Net carrying amount | $ | 179,596 | $ | 174,426 | |||||
As of December 31, 2013, amortization expense for existing identifiable intangible assets is expected to be $97,933, $58,797 and $22,866 for the years ended December 31, 2014, 2015 and 2016, respectively. Such assets will be fully amortized at December 31, 2016. | |||||||||
Software Development Costs and Purchased Software Technology | ' | ||||||||
Software Development Costs and Purchased Software Technology | |||||||||
In accordance with the authoritative guidance issued by the FASB on costs of software to be sold, leased, or marketed, costs associated with the development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility of the product has been established. Based on the Company’s product development process, technological feasibility is established upon completion of a working model. Amortization of software development costs is recorded at the greater of the straight-line basis over the product’s estimated life, or the ratio of current period revenue of the related products to total current and anticipated future revenue of these products. During the years ended December 31, 2013, 2012 and 2011, the Company recorded $339,589, $301,263 and $140,326, respectively, of amortization expense related to capitalized software costs. The gross carrying amount and accumulated amortization of software development costs as of December 31, 2013 and 2012 are as follows: | |||||||||
December 31, 2013 | December 31, 2012 | ||||||||
Software development costs: | |||||||||
Gross carrying amount | 2,718,900 | 1,745,058 | |||||||
Accumulated amortization | (922,825 | ) | (583,236 | ) | |||||
Software development costs, net | 1,796,075 | 1,161,822 | |||||||
As of December 31, 2013, amortization expense for software development costs is expected to be $487,284, $487,284, $409,595, $228,481 and $183,431 for the years ended December 31, 2014, 2015, 2016, 2017 and 2018, respectively. Such assets will be fully amortized at December 31, 2018. | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | |||||||||
The Company records income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 realized 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. In determining the period in which related tax benefits are realized for financial reporting purposes, excess share-based compensation deductions included in net operating losses are realized after regular net operating losses are exhausted. | |||||||||
The Company accounts for uncertain tax positions in accordance with the authoritative guidance issued by the FASB on income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return, should be recorded in the financial statements. Pursuant to the authoritative guidance, the Company may recognize the tax benefit from an uncertain tax position only if it meets the “more likely than not” threshold that the position will be sustained on examination by the taxing authority, based on the technical merits of the position or expiration of statutes. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. In addition, the authoritative guidance addresses de-recognition, classification, interest and penalties on income taxes, accounting in interim periods, and also requires increased disclosures. The Company includes interest and penalties related to its uncertain tax positions as part of income tax expense within its consolidated statement of operations. See Note (6) Income Taxes for additional information. | |||||||||
Long-Lived Assets | ' | ||||||||
Long-Lived Assets | |||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. | |||||||||
Share-Based Payments | ' | ||||||||
Share-Based Payments | |||||||||
The Company accounts for share-based payments in accordance with the authoritative guidance issued by the FASB on share-based compensation, which establishes the accounting for transactions in which an entity exchanges its equity instruments for goods or services. Under the provisions of the authoritative guidance, share-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period), net of estimated forfeitures. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model. The estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical experience. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. All share-based awards are expected to be fulfilled with new shares of common stock. See Note (10) Share-Based Payment Arrangements for additional information. | |||||||||
Foreign Currency | ' | ||||||||
Foreign Currency | |||||||||
Assets and liabilities of foreign operations are translated at rates of exchange at the end of the period, while results of operations are translated at average exchange rates in effect for the period. Gains and losses from the translation of foreign assets and liabilities from the functional currency of the Company’s subsidiaries into the U.S. dollar are classified as accumulated other comprehensive loss in stockholders’ equity. Gains and losses from foreign currency transactions are included in the consolidated statements of operations within interest and other income (loss), net. | |||||||||
Earnings Per Share (EPS) | ' | ||||||||
Earnings Per Share (EPS) | |||||||||
Basic EPS is computed based on the weighted average number of shares of common stock outstanding. Diluted EPS is computed based on the weighted average number of common shares outstanding increased by dilutive common stock equivalents, attributable to stock option awards, restricted stock awards, restricted stock unit awards and Series A redeemable convertible preferred stock outstanding. | |||||||||
Investments | ' | ||||||||
Investments | |||||||||
During December 2013, the Company sold its interest in Tianjin Zhongke Blue Whale Information Technologies Co., Ltd. (“Blue Whale”), a Chinese joint venture, for $3.0 million. The Company recorded a gain of $2,096,364 within "interest and other income (loss), net" in the accompanying consolidated statements of operations. As of December 31, 2013 the Company did not have any other cost-method investments. | |||||||||
As of December 31, 2012, the Company maintained certain cost-method investments totaling approximately $0.9 million, which are included within “other assets” in the accompanying consolidated balance sheets. During 2012 and 2011 the Company recognized impairment charges of approximately $11,000 and $42,000, respectively, related to certain of its cost-method investments as a result of other-than-temporary declines in market value related to certain of these investments. These charges are included within “interest and other income (loss), net” in the accompanying consolidated statements of operations. | |||||||||
Treasury Stock | ' | ||||||||
Treasury Stock | |||||||||
The Company accounts for treasury stock under the cost method and includes treasury stock as a component of stockholders’ equity. | |||||||||
New Accounting Pronouncements | ' | ||||||||
New Accounting Pronouncements | |||||||||
In July 2013, the FASB issued new guidance which requires the netting of an unrecognized tax benefit, or a portion of an unrecognized tax benefit, against a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward if such settlement is required or expected in the event the uncertain tax position is disallowed. The new guidance is effective prospectively to all existing unrecognized tax benefits, but entities can choose to apply it retrospectively. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company will be the first quarter of 2014. We do not expect the adoption of the new guidance by the Company to have a material impact on our financial results. | |||||||||
In February 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance which requires companies to present information about reclassification adjustments from accumulated other comprehensive income in their financial statements or footnotes. The adoption of this new accounting guidance in the first quarter of 2013 did not have a material impact on our consolidated financial position, results of operations or cash flows. See Note (7) Accumulated Other Comprehensive Loss for the related disclosure. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||||||
Schedule of Intangible Assets and Goodwill | ' | ||||||||||||
The gross carrying amount and accumulated amortization of other intangible assets as of December 31, 2013 and 2012 are as follows: | |||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||
Goodwill | $ | 4,150,339 | $ | 4,150,339 | |||||||||
Other intangible assets: | |||||||||||||
Gross carrying amount | $ | 3,256,709 | $ | 3,128,588 | |||||||||
Accumulated amortization | (3,077,113 | ) | (2,954,162 | ) | |||||||||
Net carrying amount | $ | 179,596 | $ | 174,426 | |||||||||
Computation of Earnings Per Share | ' | ||||||||||||
The following represents a reconciliation of the numerators and denominators of the basic and diluted EPS computation: | |||||||||||||
Year Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Numerator: | |||||||||||||
Net Loss | $ | (10,932,590 | ) | $ | (14,984,321 | ) | $ | (23,368,283 | ) | ||||
Effects of redeemable convertible preferred stock: | |||||||||||||
Less: Preferred stock dividends | 216,379 | — | — | ||||||||||
Less: accretion to redemption value of series A preferred stock | 127,504 | — | — | ||||||||||
Net loss attributable to common stockholders | $ | (11,276,473 | ) | $ | (14,984,321 | ) | $ | (23,368,283 | ) | ||||
Denominator: | |||||||||||||
Basic Shares outstanding | 47,979,467 | 47,408,995 | 46,648,928 | ||||||||||
Effect of dilutive securities: | |||||||||||||
Stock options and restricted stock | — | — | — | ||||||||||
Preferred stock | — | — | — | ||||||||||
Diluted shares outstanding | 47,979,467 | 47,408,995 | 46,648,928 | ||||||||||
EPS: | |||||||||||||
Basic net loss per share attributable to common stockholders | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.50 | ) | ||||
Diluted net loss per share attributable to common stockholders | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.50 | ) | ||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of Property and Equipment | ' | ||||||||
Property and equipment consist of the following: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Computer hardware and software | $ | 16,427,412 | $ | 16,626,381 | |||||
Furniture and equipment | 808,252 | 893,918 | |||||||
Leasehold improvements | 2,090,902 | 2,578,942 | |||||||
Automobile | 13,008 | 13,008 | |||||||
19,339,574 | 20,112,249 | ||||||||
Less accumulated depreciation | (16,022,230 | ) | (16,131,570 | ) | |||||
$ | 3,317,344 | $ | 3,980,679 | ||||||
Marketable_Securities_Tables
Marketable Securities (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||||||||||
Schedule of Available-for-sale Securities | ' | ||||||||||||
The cost and fair values of the Company’s available-for-sale marketable securities as of December 31, 2013, were as follows: | |||||||||||||
Aggregate | Cost or Amortized | Net Unrealized | |||||||||||
Fair Value | Cost | Gains | |||||||||||
Government securities | $ | 6,252,339 | $ | 6,249,483 | $ | 2,856 | |||||||
Corporate debt securities | 1,820,769 | 1,820,215 | 554 | ||||||||||
$ | 8,073,108 | $ | 8,069,698 | $ | 3,410 | ||||||||
The cost and fair values of the Company’s available-for-sale marketable securities as of December 31, 2012, were as follows: | |||||||||||||
Aggregate | Cost or Amortized | Net Unrealized | |||||||||||
Fair Value | Cost | Gains | |||||||||||
Government securities | $ | 8,328,392 | $ | 8,324,372 | $ | 4,020 | |||||||
Corporate debt securities | 2,202,550 | 2,200,360 | 2,190 | ||||||||||
$ | 10,530,942 | $ | 10,524,732 | $ | 6,210 | ||||||||
Schedule of cost basis and fair value of available-for-sale securities by contractual maturity | ' | ||||||||||||
The cost and fair values of available-for-sale securities by contractual maturity as of December 31, 2013, were as follows: | |||||||||||||
Fair Value | Cost | ||||||||||||
Due within one year | $ | 7,161,703 | $ | 7,157,746 | |||||||||
Due after one year | 911,405 | 911,952 | |||||||||||
$ | 8,073,108 | $ | 8,069,698 | ||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Schedule of Fair Value Assets Measured On Recurring Basis | ' | ||||||||||||||||
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2013: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Total | Quoted Prices in | Significant other | Significant | ||||||||||||||
Active Markets for | Inputs | Unobservable | |||||||||||||||
Identical Assets | (Level 2) | Inputs | |||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds and commercial paper | $ | 8,486,633 | $ | 8,486,633 | $ | — | $ | — | |||||||||
Total cash equivalents | 8,486,633 | 8,486,633 | — | — | |||||||||||||
Marketable securities: | |||||||||||||||||
Corporate debt and government securities | 8,073,108 | — | 8,073,108 | — | |||||||||||||
Total marketable securities | 8,073,108 | — | 8,073,108 | — | |||||||||||||
Derivative liabilities: | |||||||||||||||||
Derivative Instruments | 159,134 | — | — | 159,134 | |||||||||||||
Total derivative liabilities | 159,134 | — | — | 159,134 | |||||||||||||
Total assets and liabilities measured at fair value | $ | 16,718,875 | $ | 8,486,633 | $ | 8,073,108 | $ | 159,134 | |||||||||
The following table presents the Company’s assets that are measured at fair value on a recurring basis at December 31, 2012: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Total | Quoted Prices in | Significant other | Significant | ||||||||||||||
Active Markets for | Inputs | Unobservable | |||||||||||||||
Identical Assets | (Level 2) | Inputs | |||||||||||||||
(Level 1) | (Level 3) | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds | $ | 4,285,309 | $ | 4,285,309 | $ | — | $ | — | |||||||||
Total cash equivalents | 4,285,309 | 4,285,309 | — | — | |||||||||||||
Marketable securities: | |||||||||||||||||
Corporate debt and government securities | 10,530,942 | — | 10,530,942 | — | |||||||||||||
Total marketable securities | 10,530,942 | — | 10,530,942 | — | |||||||||||||
Total assets measured at fair value | $ | 14,816,251 | $ | 4,285,309 | $ | 10,530,942 | $ | — | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs | ' | ||||||||||||||||
The following table presents the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of each of the years ended December 31, 2013 and 2012: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
Significant Unobservable Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||
Beginning Balance | $ | — | $ | 611,082 | |||||||||||||
Total unrealized gains in accumulated other comprehensive loss | — | 88,918 | |||||||||||||||
Securities called by issuer | — | (700,000 | ) | ||||||||||||||
Issuance of Derivative Instruments | 170,337 | — | |||||||||||||||
Total gains recognized in earnings | (11,203 | ) | — | ||||||||||||||
Ending Balance | $ | 159,134 | $ | — | |||||||||||||
Accrued_Expenses_Tables
Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Schedule of Accrued Expenses | ' | ||||||||
Accrued expenses are comprised of the following: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Accrued compensation | $ | 2,476,854 | $ | 4,052,253 | |||||
Accrued consulting and professional fees | 1,138,165 | 1,462,399 | |||||||
Accrued marketing and promotion | 91,045 | 182,412 | |||||||
Other accrued expenses | 705,083 | 1,270,598 | |||||||
Accrued income taxes | 300,627 | 295,115 | |||||||
Accrued other taxes | 993,096 | 1,172,007 | |||||||
Accrued hardware purchases | 1,100,051 | 1,221,930 | |||||||
Accrued and deferred rent | — | 76,069 | |||||||
Accrued restructuring costs | 1,280,628 | 478 | |||||||
Accrued investigation, litigation, and settlement costs | 356,935 | 6,987,321 | |||||||
Accrued preferred stock dividends | 216,379 | — | |||||||
$ | 8,658,863 | $ | 16,720,582 | ||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
Schedule of loss before income taxes | ' | ||||||||||||
Information pertaining to the Company’s loss before income taxes and the applicable provision for income taxes is as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Loss before income taxes: | |||||||||||||
Domestic loss | $ | (13,466,322 | ) | $ | (15,356,162 | ) | $ | (24,181,349 | ) | ||||
Foreign income | 959,964 | 1,158,248 | 2,021,398 | ||||||||||
Total loss before income taxes: | (12,506,358 | ) | (14,197,914 | ) | (22,159,951 | ) | |||||||
(Benefit)/provision for income taxes: | |||||||||||||
Current: | |||||||||||||
Federal | $ | (1,823,192 | ) | $ | 105,198 | $ | 94,974 | ||||||
State and local | (209,079 | ) | 18,747 | 11,453 | |||||||||
Foreign | 348,300 | 745,812 | 1,262,339 | ||||||||||
(1,683,971 | ) | 869,757 | 1,368,766 | ||||||||||
Deferred: | |||||||||||||
Federal | $ | 14,875 | $ | 14,876 | $ | 14,876 | |||||||
State and local | 981 | 981 | 981 | ||||||||||
Foreign | 94,347 | (99,207 | ) | (176,291 | ) | ||||||||
110,203 | (83,350 | ) | (160,434 | ) | |||||||||
Total (benefit)/provision for income taxes: | $ | (1,573,768 | ) | $ | 786,407 | $ | 1,208,332 | ||||||
Schedule of deferred tax assets and liabilities | ' | ||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | ||||||||||||
Deferred Tax Assets: | |||||||||||||
Allowance for receivables | $ | 103,085 | $ | 350,738 | |||||||||
Deferred revenue | 2,344,449 | 3,104,017 | |||||||||||
Share-based compensation | 4,032,431 | 6,236,175 | |||||||||||
Accrued expenses and other liabilities | 559,495 | 669,844 | |||||||||||
Domestic net operating loss carryforwards | 22,553,301 | 16,526,224 | |||||||||||
Foreign net operating loss carryforwards | 49,651 | 405,818 | |||||||||||
Tax credit carryforwards | 581,046 | 654,966 | |||||||||||
AMT tax credit carryforwards | 484,920 | 485,817 | |||||||||||
Capital loss carryforwards | 79,140 | 80,055 | |||||||||||
Fixed assets | 736,436 | 957,107 | |||||||||||
Intangibles | 2,643,806 | 3,195,185 | |||||||||||
Sub-total | 34,167,760 | 32,665,946 | |||||||||||
Valuation allowance | (33,870,014 | ) | (32,186,965 | ) | |||||||||
Total Deferred Tax Assets | $ | 297,746 | $ | 478,981 | |||||||||
Deferred Tax Liabilities: | |||||||||||||
Foreign withholding taxes | (101,713 | ) | (96,360 | ) | |||||||||
Total Deferred Tax Liabilities | $ | (101,713 | ) | $ | (96,360 | ) | |||||||
Net Deferred Tax Assets | $ | 196,033 | $ | 382,621 | |||||||||
Schedule of effective tax rate reconciliation | ' | ||||||||||||
The effective tax rate before income taxes varies from the current statutory federal income tax rate as follows: | |||||||||||||
December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Tax at Federal statutory rate | $ | (4,377,225 | ) | $ | (4,969,270 | ) | $ | (7,755,983 | ) | ||||
Increase (reduction) in income taxes resulting from: | |||||||||||||
State and local taxes | 8,948 | (3,130 | ) | (59 | ) | ||||||||
Non-deductible expenses | 25,295 | 50,070 | (25,071 | ) | |||||||||
Settlement costs | 56,882 | (553,700 | ) | 2,625,000 | |||||||||
Net effect of foreign operations | 552,855 | 259,592 | 530,630 | ||||||||||
Uncertain tax positions | (2,173,905 | ) | 140,625 | 118,351 | |||||||||
Change in valuation allowance | 4,333,382 | 5,862,220 | 5,715,464 | ||||||||||
$ | (1,573,768 | ) | $ | 786,407 | $ | 1,208,332 | |||||||
Schedule of unrecognized tax benefits | ' | ||||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows: | |||||||||||||
2013 | 2012 | ||||||||||||
Balance at January 1, | $ | 2,085,484 | $ | 2,081,912 | |||||||||
Increases to tax positions taken in prior years | 13,034 | 3,572 | |||||||||||
Decreases to tax positions taken in prior years | — | — | |||||||||||
Increase for tax positions taken during the current year | 66,139 | — | |||||||||||
Expiration of statutes of limitation | (1,947,420 | ) | — | ||||||||||
Balance at December 31, | $ | 217,237 | $ | 2,085,484 | |||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss(Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | ' | ||||||||||||||||
The changes in Accumulated Other Comprehensive Loss, net of tax, for December 31, 2013 are as follows: | |||||||||||||||||
Foreign | Net | Net | Total | ||||||||||||||
Currency | Unrealized | Minimum | |||||||||||||||
Translation | Gains on | Pension | |||||||||||||||
Marketable | Liability | ||||||||||||||||
Securities | |||||||||||||||||
Accumulated other comprehensive (loss) income at January 1, 2013 | $ | (1,601,138 | ) | $ | 6,210 | $ | (55,122 | ) | $ | (1,650,050 | ) | ||||||
Other comprehensive (loss) income | |||||||||||||||||
Other comprehensive (loss) income before reclassifications | (92,767 | ) | (1,974 | ) | (25,320 | ) | (120,061 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive (loss) income | — | (826 | ) | 8,550 | 7,724 | ||||||||||||
Total other comprehensive (loss) income | (92,767 | ) | (2,800 | ) | (16,770 | ) | (112,337 | ) | |||||||||
Accumulated other comprehensive (loss) income at December 31, 2013 | $ | (1,693,905 | ) | $ | 3,410 | $ | (71,892 | ) | $ | (1,762,387 | ) | ||||||
ShareBased_Payment_Arrangement1
Share-Based Payment Arrangements (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Details of Stock Option Plan | ' | |||||||||||||
The following table summarizes the plans under which the Company was able to grant equity compensation as of December 31, 2013: | ||||||||||||||
Name of Plan | Shares | Shares Available | Shares | Last Date for Grant | ||||||||||
Authorized | for Grant | Outstanding | of Shares | |||||||||||
FalconStor Software, Inc., 2006 Incentive Stock Plan | 13,455,546 | 4,191,329 | 6,603,865 | May 17, 2016 | ||||||||||
FalconStor Software, Inc., 2013 Outside Directors Equity Compensation Plan | 400,000 | 350,000 | 50,000 | May 9, 2016 | ||||||||||
Schedule of Equity Awards Outstanding | ' | |||||||||||||
The following table summarizes the Company’s equity plans that have expired but that still have equity awards outstanding as of December 31, 2013: | ||||||||||||||
Name of Plan | Shares Available for Grant | Shares Outstanding | ||||||||||||
FalconStor Software, Inc., 2000 Stock Option Plan | — | 1,140,667 | ||||||||||||
2004 Outside Directors Stock Option Plan | — | 145,000 | ||||||||||||
FalconStor Software, Inc., 2007 Outside Directors Equity Compensation Plan | — | 160,000 | ||||||||||||
FalconStor Software, Inc., 2010 Outside Directors Equity Compensation Plan | — | 50,500 | ||||||||||||
Schedule of Stock Option Activity | ' | |||||||||||||
A summary of the Company’s stock option activity for 2013 is as follows: | ||||||||||||||
Number of | Weighted | Weighted | Aggregate | |||||||||||
Options | Average | Average | Intrinsic | |||||||||||
Exercise | Remaining | Value | ||||||||||||
Price | Contractual | |||||||||||||
Life (Years) | ||||||||||||||
Options Outstanding at December 31, 2012 | 11,360,842 | $ | 4.66 | 6.46 | $ | 497,695 | ||||||||
Granted | 2,034,500 | $ | 1.43 | |||||||||||
Exercised | (310,000 | ) | $ | 2.25 | ||||||||||
Forfeited | (5,178,050 | ) | $ | 4.13 | ||||||||||
Expired | (362,860 | ) | $ | 6.69 | ||||||||||
Options Outstanding at December 31, 2013 | 7,544,432 | $ | 4.16 | 6.28 | $ | 3,000 | ||||||||
Options Exercisable at December 31, 2013 | 4,836,007 | $ | 5.41 | 4.87 | $ | — | ||||||||
Options Expected to Vest after December 31, 2013 (1) | 1,895,898 | $ | 1.93 | 8.8 | $ | 2,100 | ||||||||
(1) Options expected to vest after December 31, 2013 reflect an estimated forfeiture rate | ||||||||||||||
Schedule of Share Based Compensation Recognized | ' | |||||||||||||
The Company recognized share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the consolidated statement of operations: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Cost of revenues - Product | $ | 181 | $ | 262 | $ | 2,960 | ||||||||
Cost of revenues - Support and Service | 136,975 | 172,707 | 461,735 | |||||||||||
Research and development costs | 363,296 | 727,826 | 1,302,129 | |||||||||||
Selling and marketing | 397,967 | 1,677,469 | 2,023,370 | |||||||||||
General and administrative | 807,010 | 2,036,505 | 1,727,864 | |||||||||||
$ | 1,705,429 | $ | 4,614,769 | $ | 5,518,058 | |||||||||
Stock Based Compensation Expense - Restricted Stock | ' | |||||||||||||
A summary of the total stock-based compensation expense related to restricted stock awards and restricted stock units, which is included in the Company’s total share-based compensation expense for each respective year, is as follows: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Directors, officers and employees | $ | 257,843 | $ | 584,959 | $ | 1,358,107 | ||||||||
Non-employee consultants | — | 13,488 | 21,882 | |||||||||||
$ | 257,843 | $ | 598,447 | $ | 1,379,989 | |||||||||
Schedule of Restricted Stock Units Activity | ' | |||||||||||||
A summary of the Company’s restricted stock activity for 2013 is as follows: | ||||||||||||||
Number of Restricted Stock Awards | ||||||||||||||
Non-Vested at December 31, 2012 | 171,190 | |||||||||||||
Granted | 550,000 | |||||||||||||
Vested | (111,000 | ) | ||||||||||||
Forfeited | (4,590 | ) | ||||||||||||
Non-Vested at December 31, 2013 | 605,600 | |||||||||||||
Schedule of Share-based Compensation, Nonemployee | ' | |||||||||||||
awards granted to non-employee consultants range from immediate vesting to three years depending on service requirements. A summary of the total stock-based compensation expense/(benefit) related to share-based awards granted to non-employee consultants, which is included in the Company’s total share-based compensation expense for each respective period, is as follows: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Non-qualified stock options | $ | 37,379 | $ | 13,999 | $ | 2,487 | ||||||||
Restricted stock awards | — | 13,488 | 21,882 | |||||||||||
$ | 37,379 | $ | 27,487 | $ | 24,369 | |||||||||
Schedule of assumptions used to value share-based compensation | ' | |||||||||||||
In addition to the exercise and grant date prices of the awards, certain weighted average assumptions that were used to estimate the fair value of share-based payment grants in the respective periods are listed in the table below: | ||||||||||||||
Years ended December 31, | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
Expected dividend yield | 0% | 0% | 0% | |||||||||||
Expected volatility | 61 - 64% | 60 - 61% | 56 - 61% | |||||||||||
Risk-free interest rate | 0.84 - 1.64% | 0.7 - 1.2% | 1.0 - 2.5% | |||||||||||
Expected term (years) | 5.5 | 5.5 | 5.5 | |||||||||||
Discount for post-vesting restrictions | N/A | N/A | N/A |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule Of Inventory | ' | ||||||||
Inventories are as follows: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Component materials | $ | 10,073 | $ | 18,989 | |||||
Finished systems | 909,317 | 623,830 | |||||||
Total Inventory | $ | 919,390 | $ | 642,819 | |||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||
Dec. 31, 2013 | ||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||
Schedule of Future Minimum Payments For Operating Leases | ' | |||
The following is a schedule of future minimum lease payments for all operating leases as of December 31, 2013: | ||||
2014 | $ | 2,595,765 | ||
2015 | 1,793,759 | |||
2016 | 1,520,711 | |||
2017 | 1,465,118 | |||
2018 | 1,459,190 | |||
Thereafter | 3,577,335 | |||
$ | 12,411,878 | |||
Restructuring_Costs_Tables
Restructuring Costs (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Restructuring and Related Activities [Abstract] | ' | ||||||||||||||||
Schedule of Restructuring Costs | ' | ||||||||||||||||
Accrued restructuring costs as of December 31, 2013 associated with the 2013 and 2012 Plans are as follows: | |||||||||||||||||
Reconciliation of Aggregate Liability Recorded for | |||||||||||||||||
Restructuring Costs Under the 2013 Plan | |||||||||||||||||
31-Dec-12 | Provisions | Payments/ Utilization | 31-Dec-13 | ||||||||||||||
Severance related costs | $ | — | $ | 3,179,131 | $ | 2,067,554 | $ | 1,111,577 | |||||||||
Facility and other costs | — | 426,889 | 231,973 | 194,916 | |||||||||||||
Total Restructuring Costs | $ | — | $ | 3,606,020 | $ | 2,299,527 | $ | 1,306,493 | |||||||||
Reconciliation of Aggregate Liability Recorded for | |||||||||||||||||
Restructuring Costs Under the 2012 Plan | |||||||||||||||||
31-Dec-12 | Provisions | Payments | 31-Dec-13 | ||||||||||||||
Severance related costs | $ | 478 | $ | — | $ | 478 | $ | — | |||||||||
Employee_Benefit_Plans_Tables
Employee Benefit Plans (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Compensation and Retirement Disclosure [Abstract] | ' | ||||||||
Schedule of Funded Status | ' | ||||||||
Pension information for the years ended December 31, 2013 and 2012, is as follows: | |||||||||
2013 | 2012 | ||||||||
Accumulated benefit obligation | $ | 171,651 | $ | 160,279 | |||||
Changes in projected benefit obligation: | |||||||||
Projected benefit obligation at beginning of year | 269,760 | 366,158 | |||||||
Interest cost | 4,621 | 7,571 | |||||||
Actuarial loss (gain) | 23,517 | (126,282 | ) | ||||||
Benefits paid | — | — | |||||||
Service cost | — | 5,624 | |||||||
Currency translation and other | (9,053 | ) | 16,689 | ||||||
Projected benefit obligation at end of year | $ | 288,845 | $ | 269,760 | |||||
Changes in plan assets: | |||||||||
Fair value of plan assets at beginning of year | $ | 108,214 | $ | 92,651 | |||||
Actual return on plan assets | 1,277 | 792 | |||||||
Benefits paid | — | — | |||||||
Employer contributions | 8,909 | 9,911 | |||||||
Currency translation and other | (3,609 | ) | 4,860 | ||||||
Fair value of plan assets at end of year | $ | 114,791 | $ | 108,214 | |||||
Funded status | $ | 174,054 | $ | 161,546 | |||||
Schedule of Pension Cost | ' | ||||||||
Components of net periodic pension cost: | |||||||||
Interest cost | $ | 4,621 | $ | 7,571 | |||||
Expected return on plan assets | (1,854 | ) | (1,916 | ) | |||||
Amortization of net loss | 5,783 | 11,159 | |||||||
Service cost | — | 5,624 | |||||||
Net periodic pension cost | $ | 8,550 | $ | 22,438 | |||||
Schedule of Assumptions Used in Computing Benefit Obligations | ' | ||||||||
The Company utilized the following assumptions in computing the benefit obligation at December 31, 2013 and 2012 as follows: | |||||||||
Years ended December 31, | |||||||||
2013 | 2012 | ||||||||
Discount rate | 2.25 | % | 1.75 | % | |||||
Rate of increase in compensation levels | 3 | % | 3 | % | |||||
Expected long-term rate of return on plan assets | 2 | % | 1.75 | % |
Segment_Reporting_and_Concentr1
Segment Reporting and Concentrations (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Schedule of Revenue And Long Lived Assets By Geographical Areas | ' | ||||||||||||
Revenues from the United States to customers in the following geographical areas for the years ended December 31, 2013, 2012 and 2011, and the location of long-lived assets as of December 31, 2013 and 2012, are summarized as follows: | |||||||||||||
Years ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Revenues: | |||||||||||||
Americas | $ | 22,538,045 | $ | 30,505,705 | $ | 36,227,426 | |||||||
Asia Pacific | 17,128,902 | 24,807,328 | 24,197,054 | ||||||||||
Europe, Middle East, Africa and Other | 18,969,557 | 20,097,936 | 22,446,122 | ||||||||||
Total Revenues | $ | 58,636,504 | $ | 75,410,969 | $ | 82,870,602 | |||||||
December 31, | |||||||||||||
2013 | 2012 | ||||||||||||
Long-lived assets: | |||||||||||||
Americas | $ | 9,712,675 | $ | 10,263,056 | |||||||||
Asia Pacific | 717,527 | 1,041,470 | |||||||||||
Europe, Middle East, Africa and Other | 612,058 | 434,353 | |||||||||||
Total long-lived assets | $ | 11,042,260 | $ | 11,738,879 | |||||||||
Valuation_and_Qualifying_Accou1
Valuation and Qualifying Accounts Allowance for Returns and Doubtful Accounts (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Valuation and Qualifying Accounts [Abstract] | ' | ||||||||||||||
Schedule of Valuation Accounts | ' | ||||||||||||||
Balance at | Charges (Benefits) to Expenses / | Balance at | |||||||||||||
Beginning of | End of | ||||||||||||||
Period Ended | Period | Revenues | Deductions | Period | |||||||||||
December 31, 2013 | $ | 940,101 | (294,074 | ) | 369,725 | $ | 276,302 | ||||||||
December 31, 2012 | $ | 1,723,679 | 357,301 | 1,140,879 | $ | 940,101 | |||||||||
December 31, 2011 | $ | 3,242,458 | 120,992 | 1,639,771 | $ | 1,723,679 | |||||||||
Quarterly_Financial_Data_Table
Quarterly Financial Data (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of quarterly financial data | ' | ||||||||||||||||
The following is a summary of selected quarterly financial data for the years ended December 31, 2013 and 2012: | |||||||||||||||||
Quarter | |||||||||||||||||
2013 | First | Second | Third | Fourth | |||||||||||||
Revenue (a) | $ | 15,284,817 | $ | 13,974,139 | $ | 14,730,038 | $ | 14,647,510 | |||||||||
Gross profit | 10,976,760 | 10,149,045 | 10,961,078 | 11,393,807 | |||||||||||||
Net (loss) income attributable to common stockholders (c) | (4,380,445 | ) | (5,207,293 | ) | (2,265,599 | ) | 576,864 | ||||||||||
Basic net (loss) income per share attributable to common stockholders | (0.09 | ) | (0.11 | ) | (0.05 | ) | 0.01 | ||||||||||
Diluted net (loss) income per share attributable to common stockholders | (0.09 | ) | (0.11 | ) | (0.05 | ) | 0.01 | ||||||||||
Quarter | |||||||||||||||||
2012 | First | Second | Third | Fourth | |||||||||||||
Revenue (b) | $ | 19,368,072 | $ | 16,466,201 | $ | 17,089,013 | $ | 22,487,683 | |||||||||
Gross profit | 14,186,230 | 11,587,960 | 12,208,096 | 16,766,610 | |||||||||||||
Net loss attributable to common stockholders | (2,449,408 | ) | (6,620,586 | ) | (3,568,051 | ) | (2,346,276 | ) | |||||||||
Basic net loss per share attributable to common stockholders | (0.05 | ) | (0.14 | ) | (0.08 | ) | (0.05 | ) | |||||||||
Diluted net loss per share attributable to common stockholders | (0.05 | ) | (0.14 | ) | (0.08 | ) | (0.05 | ) | |||||||||
The sum of the quarterly net income (loss) per share amounts do not necessarily equal the annual amount reported, as per share amounts are computed independently for each quarter and the annual period based on the weighted average common shares outstanding in each period. | |||||||||||||||||
(a) | The Company recorded a benefit (expense) of approximately $0.1 million, $0.0 million, $0.0 million and $(0.1) million during the first, second, third and fourth quarters of 2013, respectively, representing the net impact from changes in accounts receivable allowances. These amounts are included within revenues in each respective period in the accompanying consolidated statements of operations. | ||||||||||||||||
(b) | The Company recorded a benefit (expense) of approximately $0.6 million, ($0.3) million, $0.2 million and $0.2 million during the first, second, third and fourth quarters of 2012, respectively, representing the net impact from changes in accounts receivable allowances. These amounts are included within revenues in each respective period in the accompanying consolidated statements of operations. | ||||||||||||||||
(c) | Net income in the fourth quarter of 2013 includes a gain on the sale of the Company's cost-method investment of $1.9 million, net of tax which was partly offset by restructuring charges of $1.3 million. |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' |
Goodwill | $4,150,339 | $4,150,339 |
Other intangible assets | ' | ' |
Gross carrying amount | 3,256,709 | 3,128,588 |
Accumulated amortization | -3,077,113 | -2,954,162 |
Net carrying amount | $179,596 | $174,426 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Numerator: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | $576,864 | ($2,265,599) | ($5,207,293) | ($4,380,445) | ($2,346,276) | ($3,568,051) | ($6,620,586) | ($2,449,408) | ($10,932,590) | ($14,984,321) | ($23,368,283) |
Preferred Stock Dividends and Other Adjustments [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less: Preferred stock dividends | ' | ' | ' | ' | ' | ' | ' | ' | 216,379 | 0 | 0 |
Less: Accretion to redemption value of Series A preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | 127,504 | 0 | 0 |
Net loss attributable to common stockholders | ' | ' | ' | ' | ' | ' | ' | ' | ($11,276,473) | ($14,984,321) | ($23,368,283) |
Denominator: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average basic shares outstanding (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 47,979,467 | 47,408,995 | 46,648,928 |
Effect of dilutive securities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options and restricted stock | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 |
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 |
Weighted average diluted shares outstanding (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 47,979,467 | 47,408,995 | 46,648,928 |
EPS: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic net loss per share attributable to common stockholders (in dollars per share) | $0.01 | ($0.05) | ($0.11) | ($0.09) | ($0.05) | ($0.08) | ($0.14) | ($0.05) | ($0.24) | ($0.32) | ($0.50) |
Diluted net loss per share attributable to common stockholders (in dollars per share) | $0.01 | ($0.05) | ($0.11) | ($0.09) | ($0.05) | ($0.08) | ($0.14) | ($0.05) | ($0.24) | ($0.32) | ($0.50) |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Gross carrying amount | $2,718,900 | $1,745,058 |
Accumulated amortization | -922,825 | -583,236 |
Software development costs, net | $1,796,075 | $1,161,822 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||||||||||
Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
Minimum | Maximum | Other assets | Tianjin Zhongke Blue Whale Information Technologies Co., Ltd. ('Blue Whale') | Series A redeemable convertible preferred stock | Stock option and restricted stock award | Stock option and restricted stock award | Stock option and restricted stock award | Interest and other income (loss), net | Government securities and corporate debt securities | Government securities and corporate debt securities | |||||
Tianjin Zhongke Blue Whale Information Technologies Co., Ltd. ('Blue Whale') | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash equivalents, fair value | $8,500,000 | $8,500,000 | $4,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted cash | 800,000 | 800,000 | 800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Marketable securities, fair value | 8,073,108 | 8,073,108 | 10,530,942 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,100,000 | 10,500,000 |
Amortization expense | ' | 122,951 | 118,789 | 323,540 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Identifiable intangible assets, amortization expense, 2014 | 97,933 | 97,933 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Identifiable intangible assets, amortization expense, 2015 | 58,797 | 58,797 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Identifiable intangible assets, amortization expense, 2016 | 22,866 | 22,866 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated useful lives of the assets | ' | ' | ' | ' | '3 years | '7 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Capitalized computer software amortization | ' | 339,589 | 301,263 | 140,326 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected future amortization expense for software development costs, 2013 | 487,284 | 487,284 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected future amortization expense for software development costs, 2014 | 487,284 | 487,284 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected future amortization expense for software development costs, 2015 | 409,595 | 409,595 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected future amortization expense for software development costs, 2016 | 228,481 | 228,481 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected future amortization expense for software development costs, 2017 | 183,431 | 183,431 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign currency transaction gain (loss) | ' | -1,073,000 | -653,000 | -78,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock equivalents excluded from diluted net loss per share | ' | 16,931,548 | 11,532,032 | 14,982,611 | ' | ' | ' | ' | 8,781,516 | 8,150,032 | 11,532,032 | 14,982,611 | ' | ' | ' |
Proceeds from sale of cost method investment | ' | 3,000,000 | 0 | 0 | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' |
Gain on sale of joint venture | 1,900,000 | 2,096,364 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | 2,096,364 | ' | ' |
Cost method investments | ' | ' | ' | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment charges recognized for other-than-temporary declines in cost method investments | ' | ' | $11,000 | $42,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Computer hardware and software | $16,427,412 | $16,626,381 |
Furniture and equipment | 808,252 | 893,918 |
Leasehold improvements | 2,090,902 | 2,578,942 |
Automobile | 13,008 | 13,008 |
Gross | 19,339,574 | 20,112,249 |
Less accumulated depreciation | -16,022,230 | -16,131,570 |
Net | $3,317,344 | $3,980,679 |
Property_and_Equipment_Details1
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Property And Equipment Details Narrative | ' | ' | ' |
Write off of fully depreciated assets and related accumulated depreciation | $2,198,795 | $4,626,989 | ' |
Depreciation expense | $2,198,286 | $2,894,308 | $3,643,895 |
Marketable_Securities_Details
Marketable Securities (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Marketable securities, fair value | $8,073,108 | $10,530,942 |
Cost or Amortized Cost | 8,069,698 | 10,524,732 |
Net Unrealized Gains | 3,410 | 6,210 |
Government securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Marketable securities, fair value | 6,252,339 | 8,328,392 |
Cost or Amortized Cost | 6,249,483 | 8,324,372 |
Net Unrealized Gains | 2,856 | 4,020 |
Corporate debt securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Marketable securities, fair value | 1,820,769 | 2,202,550 |
Cost or Amortized Cost | 1,820,215 | 2,200,360 |
Net Unrealized Gains | $554 | $2,190 |
Marketable_Securities_Details_
Marketable Securities (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Available-for-sale securities, cost | $8,069,698 | $10,524,732 |
Marketable securities, fair value | 8,073,108 | 10,530,942 |
Due Within One Year | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Available-for-sale securities, cost | 7,157,746 | ' |
Marketable securities, fair value | 7,161,703 | ' |
Due After One Year | ' | ' |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' |
Available-for-sale securities, cost | 911,952 | ' |
Marketable securities, fair value | $911,405 | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Dec. 31, 2013 | Sep. 16, 2013 | Dec. 31, 2012 |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | $8,073,108 | ' | $10,530,942 |
Derivative instruments, fair value | 159,134 | 170,337 | ' |
Government securities and corporate debt securities | ' | ' | ' |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 8,100,000 | ' | 10,500,000 |
Recurring | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 8,486,633 | ' | 4,285,309 |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 8,073,108 | ' | 10,530,942 |
Derivative instruments, fair value | 159,134 | ' | ' |
Total derivative liabilities measured at fair value | 159,134 | ' | ' |
Total assets and liabilities measured at fair value | 16,718,875 | ' | ' |
Total assets measure at fair value | ' | ' | 14,816,251 |
Recurring | Government securities and corporate debt securities | ' | ' | ' |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 8,073,108 | ' | 10,530,942 |
Recurring | Money market funds and commercial paper | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 8,486,633 | ' | ' |
Recurring | Money market funds | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | ' | ' | 4,285,309 |
Recurring | Fair Value, Inputs, Level 1 | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 8,486,633 | ' | 4,285,309 |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 0 | ' | 0 |
Derivative instruments, fair value | 0 | ' | ' |
Total derivative liabilities measured at fair value | 0 | ' | ' |
Total assets and liabilities measured at fair value | 8,486,633 | ' | ' |
Total assets measure at fair value | ' | ' | 4,285,309 |
Recurring | Fair Value, Inputs, Level 1 | Government securities and corporate debt securities | ' | ' | ' |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 0 | ' | 0 |
Recurring | Fair Value, Inputs, Level 1 | Money market funds and commercial paper | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 8,486,633 | ' | ' |
Recurring | Fair Value, Inputs, Level 1 | Money market funds | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | ' | ' | 4,285,309 |
Recurring | Fair Value, Inputs, Level 2 | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 0 | ' | 0 |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 8,073,108 | ' | 10,530,942 |
Derivative instruments, fair value | 0 | ' | ' |
Total derivative liabilities measured at fair value | 0 | ' | ' |
Total assets and liabilities measured at fair value | 8,073,108 | ' | ' |
Total assets measure at fair value | ' | ' | 10,530,942 |
Recurring | Fair Value, Inputs, Level 2 | Money market funds and commercial paper | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 0 | ' | ' |
Recurring | Fair Value, Inputs, Level 2 | Money market funds | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | ' | ' | 0 |
Recurring | Fair Value, Inputs, Level 3 | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 0 | ' | 0 |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 0 | ' | 0 |
Derivative instruments, fair value | 159,134 | ' | ' |
Total derivative liabilities measured at fair value | 159,134 | ' | ' |
Total assets and liabilities measured at fair value | 159,134 | ' | ' |
Total assets measure at fair value | ' | ' | 0 |
Recurring | Fair Value, Inputs, Level 3 | Government securities and corporate debt securities | ' | ' | ' |
Marketable securities: | ' | ' | ' |
Marketable securities, fair value | 0 | ' | 0 |
Recurring | Fair Value, Inputs, Level 3 | Money market funds and commercial paper | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | 0 | ' | ' |
Recurring | Fair Value, Inputs, Level 3 | Money market funds | ' | ' | ' |
Cash equivalents: | ' | ' | ' |
Total cash equivalents | ' | ' | $0 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ' | ' |
Beginning Balance | $0 | $611,082 |
Total unrealized gains in accumulated other comprehensive loss | 0 | 88,918 |
Securities called by issuer | 0 | -700,000 |
Issuance of Derivative Instruments | 170,337 | 0 |
Total gains recognized in earnings | -11,203 | 0 |
Ending Balance | $159,134 | $0 |
Fair_Value_Measurements_Detail2
Fair Value Measurements (Details Narrative) (USD $) | Dec. 31, 2013 | Sep. 16, 2013 | Dec. 31, 2012 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Investments, level 2 | $8,073,108 | ' | $10,530,942 |
Derivative Instruments | 159,134 | 170,337 | ' |
Other long-term liabilities | Fair Value, Inputs, Level 3 | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Derivative Instruments | 200,000 | ' | ' |
Money market funds and commercial paper | Cash and cash equivalents | Fair Value, Inputs, Level 1 | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Money market funds, level 1 | 8,500,000 | ' | ' |
Money market funds | Cash and cash equivalents | Fair Value, Inputs, Level 1 | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Money market funds, level 1 | ' | ' | 4,300,000 |
Government securities and corporate debt securities | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Investments, level 2 | 8,100,000 | ' | 10,500,000 |
Government securities and corporate debt securities | Marketable securities | Fair Value, Inputs, Level 2 | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Investments, level 2 | $8,100,000 | ' | $10,500,000 |
Accrued_Expenses_Details
Accrued Expenses (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Accrued compensation | $2,476,854 | $4,052,253 |
Accrued consulting and professional fees | 1,138,165 | 1,462,399 |
Accrued marketing and promotion | 91,045 | 182,412 |
Other accrued expenses | 705,083 | 1,270,598 |
Accrued income taxes | 300,627 | 295,115 |
Accrued other taxes | 993,096 | 1,172,007 |
Accrued hardware purchases | 1,100,051 | 1,221,930 |
Accrued and deferred rent | 0 | 76,069 |
Accrued restructuring costs | 1,280,628 | 478 |
Accrued investigation, litigation, and settlement costs | 356,935 | 6,987,321 |
Accrued preferred stock dividends | 216,379 | 0 |
Total accrued expenses | $8,658,863 | $16,720,582 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Loss before income taxes: | ' | ' | ' |
Domestic loss | ($13,466,322) | ($15,356,162) | ($24,181,349) |
Foreign income | 959,964 | 1,158,248 | 2,021,398 |
Loss before income taxes | -12,506,358 | -14,197,914 | -22,159,951 |
(Benefit)/provision for income taxes: | ' | ' | ' |
Federal | -1,823,192 | 105,198 | 94,974 |
State and local | -209,079 | 18,747 | 11,453 |
Foreign | 348,300 | 745,812 | 1,262,339 |
Total | -1,683,971 | 869,757 | 1,368,766 |
Deferred: | ' | ' | ' |
Federal | 14,875 | 14,876 | 14,876 |
State and local | 981 | 981 | 981 |
Foreign | 94,347 | -99,207 | -176,291 |
Total | 110,203 | -83,350 | -160,434 |
Income Tax Expense (Benefit) | ($1,573,768) | $786,407 | $1,208,332 |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Tax Assets: | ' | ' |
Allowance for receivables | $103,085 | $350,738 |
Deferred revenue | 2,344,449 | 3,104,017 |
Share-based compensation | 4,032,431 | 6,236,175 |
Accrued expenses and other liabilities | 559,495 | 669,844 |
Domestic net operating loss carryforwards | 22,553,301 | 16,526,224 |
Foreign net operating loss carryforwards | 49,651 | 405,818 |
Tax credit carryforwards | 581,046 | 654,966 |
AMT tax credit carryforwards | 484,920 | 485,817 |
Capital loss carryforwards | 79,140 | 80,055 |
Fixed assets | 736,436 | 957,107 |
Intangibles | 2,643,806 | 3,195,185 |
Sub-total | 34,167,760 | 32,665,946 |
Valuation allowance | -33,870,014 | -32,186,965 |
Total Deferred Tax Assets | 297,746 | 478,981 |
Deferred Tax Liabilities: | ' | ' |
Foreign withholding taxes | -101,713 | -96,360 |
Total Deferred Tax Liabilities | -101,713 | -96,360 |
Net Deferred Tax Assets | $196,033 | $382,621 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax Disclosure [Abstract] | ' | ' | ' |
Tax at Federal statutory rate | ($4,377,225) | ($4,969,270) | ($7,755,983) |
Increase (reduction) in income taxes resulting from: | ' | ' | ' |
State and local taxes | 8,948 | -3,130 | -59 |
Non-deductible expenses | 25,295 | 50,070 | -25,071 |
Settlement costs | 56,882 | -553,700 | 2,625,000 |
Net effect of foreign operations | 552,855 | 259,592 | 530,630 |
Uncertain tax positions | -2,173,905 | 140,625 | 118,351 |
Change in valuation allowance | 4,333,382 | 5,862,220 | 5,715,464 |
Income Tax Expense (Benefit) | ($1,573,768) | $786,407 | $1,208,332 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Balance at January 1, | $2,085,484 | $2,081,912 |
Increases in tax positions for prior years | 13,034 | 3,572 |
Decreases in tax positions for prior years | 0 | 0 |
Increase for tax positions taken during the current year | 66,139 | 0 |
Expiration of statutes of limitation | -1,947,420 | 0 |
Balance at December 31, | $217,237 | $2,085,484 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Operating Loss Carryforwards [Line Items] | ' | ' | ' |
(Benefit)/Provision for income taxes | ($1,573,768) | $786,407 | $1,208,332 |
Tax benefit related to the reversal of unrecognized tax benefits | 2,332,270 | ' | ' |
Federal net operating loss carryforwards expire | 'expire beginning in 2030 through 2033, if not utilized. | ' | ' |
Tax credit carryforwards | 1,065,966 | ' | ' |
Unrecognized tax benefits that would reduce effective tax rate | 284,112 | ' | ' |
Accrued interest and penalties | 66,875 | ' | ' |
Unrecognized tax benefits expected to reverse, net twelve months | 0 | ' | ' |
Research tax credit carryforward | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' |
Tax credit carryforwards | 574,997 | ' | ' |
Domestic tax authority | ' | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' | ' |
Federal net operating loss carryforwards | $61,609,001 | ' | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' |
Accumulated other comprehensive (loss) income at January 1, 2013 | ($1,650,050) |
Other comprehensive (loss) income | ' |
Other comprehensive (loss) income before reclassifications | -120,061 |
Amounts reclassified from accumulated other comprehensive (loss) income | 7,724 |
Total other comprehensive (loss) income | -112,337 |
Accumulated other comprehensive (loss) income at December 31, 2013 | -1,762,387 |
Foreign Currency Translation | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' |
Accumulated other comprehensive (loss) income at January 1, 2013 | -1,601,138 |
Other comprehensive (loss) income | ' |
Other comprehensive (loss) income before reclassifications | -92,767 |
Amounts reclassified from accumulated other comprehensive (loss) income | 0 |
Total other comprehensive (loss) income | -92,767 |
Accumulated other comprehensive (loss) income at December 31, 2013 | -1,693,905 |
Net Unrealized Gains On Marketable Securities | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' |
Accumulated other comprehensive (loss) income at January 1, 2013 | 6,210 |
Other comprehensive (loss) income | ' |
Other comprehensive (loss) income before reclassifications | -1,974 |
Amounts reclassified from accumulated other comprehensive (loss) income | -826 |
Total other comprehensive (loss) income | -2,800 |
Accumulated other comprehensive (loss) income at December 31, 2013 | 3,410 |
Net Minimum Pension Liability | ' |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' |
Accumulated other comprehensive (loss) income at January 1, 2013 | -55,122 |
Other comprehensive (loss) income | ' |
Other comprehensive (loss) income before reclassifications | -25,320 |
Amounts reclassified from accumulated other comprehensive (loss) income | 8,550 |
Total other comprehensive (loss) income | -16,770 |
Accumulated other comprehensive (loss) income at December 31, 2013 | ($71,892) |
Redeemable_Convertible_Preferr1
Redeemable Convertible Preferred Stock (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 16, 2013 | Sep. 16, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |
Hale Capital Partners, LP | Interest and other income (loss) | Series A redeemable convertible preferred stock | Maximum | Maximum | |||||
Prime rate | Prime rate | Series A redeemable convertible preferred stock | |||||||
Prime rate | |||||||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares authorized to issue | 2,000,000 | 2,000,000 | ' | ' | ' | ' | ' | ' | ' |
Series A redeemable convertible preferred stock | 900,000 | 0 | ' | ' | 900,000 | ' | ' | ' | ' |
Series A redeemable convertible preferred stock, par value | $0.00 | $0.00 | ' | ' | $0.00 | ' | ' | ' | ' |
Redeemable preferred stock price per share | ' | ' | ' | ' | $10 | ' | ' | ' | ' |
Series A redeemable convertible preferred stock, purchase consideration (in millions) | $9,000,000 | $0 | ' | ' | $9,000,000 | ' | ' | ' | ' |
Redeemable convertible preferred stock conversion price | ' | ' | ' | ' | $1.02 | ' | ' | ' | ' |
Net proceeds from issuance of redeemable convertible preferred stock | 8,731,677 | 0 | 0 | ' | 8,731,677 | ' | ' | ' | ' |
Consecutive trading days, convertible debt threshold | '60 days | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum percentage of common stock price to conversion price to determine eligibility of conversion through 60 consecutive trading days | 250.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Threshold of stock price trigger, percentage | 225.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Daily trading volume | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Consecutive days | '20 days | ' | ' | ' | ' | ' | ' | ' | ' |
Upon certain triggering events holders can redeem | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, Basis Spread on Dividend Rate, Conditional Percentage | ' | ' | ' | ' | ' | ' | 10.00% | ' | ' |
Preferred stock dividend rate description | 'Holders of the redeemable convertible preferred stock are entitled to receive quarterly dividends at the Prime Rate (Wall Street Journal Eastern Edition) plus 5% (up to a maximum amount of 10%) | ' | ' | ' | ' | ' | ' | ' | ' |
Basis spread on preferred stock dividend, percentage | 5.00% | ' | ' | ' | ' | ' | 5.00% | ' | ' |
Increase of dividend rate each six months stock remains unredeemed | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' |
Maximum dividend rate | ' | ' | ' | ' | ' | ' | ' | 10.00% | 19.00% |
Preferred stock dividend, minimum cash flow requirement | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Share Price | $1.23 | ' | ' | ' | ' | ' | ' | ' | ' |
Voting power | 7,317,073 | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of accounts receivable | 80.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Accounting treatment for temporary equity | 'The Company has classified the redeemable convertible preferred stock as temporary equity in the financial statements as it is subject to redemption at the option of the holder under certain circumstances. | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative instruments, fair value | 159,134 | ' | ' | 170,337 | ' | ' | ' | ' | ' |
Gain on derivative | ' | ' | ' | ' | ' | 11,203 | ' | ' | ' |
Stock price on the date one day prior to the closing of the Preferred Stock Agreement | $1.23 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock price greater than conversion price of preferred stock | $0.21 | ' | ' | ' | ' | ' | ' | ' | ' |
Beneficial conversion feature | 1,951,266 | ' | ' | ' | ' | ' | ' | ' | ' |
Deduction included as an adjustment to net loss attributable to common stockholders | 127,504 | 0 | 0 | ' | ' | ' | ' | ' | ' |
Transaction costs associated with the preferred stock issuance | 268,323 | ' | ' | ' | ' | ' | ' | ' | ' |
Undistributed preferred stock dividends | $216,379 | $0 | $0 | ' | ' | ' | ' | ' | ' |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 12 Months Ended | 159 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Feb. 28, 2009 | |
Equity [Abstract] | ' | ' | ' | ' |
Company's Board of Directors has authorized the repurchase of common shares | ' | ' | ' | 14,000,000 |
Common stock repurchased | 0 | 0 | 8,005,235 | ' |
Payment for shares repurchased since October 2001 | ' | ' | $46,916,339 | ' |
Authorization to repurchase additional shares | 5,994,765 | ' | 5,994,765 | ' |
ShareBased_Payment_Arrangement2
Share-Based Payment Arrangements (Details) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Jul. 03, 2013 | Dec. 31, 2013 |
FalconStor Software, Inc., 2006 Incentive Stock Plan | FalconStor Software, Inc., 2006 Incentive Stock Plan | FalconStor Software, Inc., 2013 Outside Directors Equity Compensation Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' |
Shares Authorized | ' | ' | 13,455,546 | 20,000,000 | 400,000 |
Shares Available for grant | ' | ' | 4,191,329 | ' | 350,000 |
Shares Outstanding | 7,544,432 | 11,360,842 | 6,603,865 | ' | 50,000 |
Last date for grant of shares | ' | ' | 17-May-16 | ' | 9-May-16 |
ShareBased_Payment_Arrangement3
Share-Based Payment Arrangements (Details 1) | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares Outstanding | 7,544,432 | 11,360,842 |
FalconStor Software, Inc., 2000 Stock Option Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares Available for grant | 0 | ' |
Shares Outstanding | 1,140,667 | ' |
2004 Outside Directors Stock Option Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares Available for grant | 0 | ' |
Shares Outstanding | 145,000 | ' |
FalconStor Software, Inc., 2007 Outside Directors Equity Compensation Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares Available for grant | 0 | ' |
Shares Outstanding | 160,000 | ' |
FalconStor Software, Inc., 2010 Outside Directors Equity Compensation Plan | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Shares Available for grant | 0 | ' |
Shares Outstanding | 50,500 | ' |
ShareBased_Payment_Arrangement4
Share-Based Payment Arrangements (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' |
Number of Options Outstanding, Beginning | 11,360,842 | ' |
Number of Options, Granted | 2,034,500 | ' |
Number of Options, Exercised | -310,000 | ' |
Number of Options, Forfeited | -5,178,050 | ' |
Number of Options, Expired | -362,860 | ' |
Number of Options Outstanding, Ending | 7,544,432 | 11,360,842 |
Number of Options, Exercisable | 4,836,007 | ' |
Number of Options, Expected to Vest after end of period | 1,895,898 | ' |
Weighted Average Exercise Price, Outstanding, Beginning | $4.66 | ' |
Weighted Average Exercise Price, Granted | $1.43 | ' |
Weighted Average Exercise Price, Exercised | $2.25 | ' |
Weighted Average Exercise Price, Forfeited | $4.13 | ' |
Weighted Average Exercise Price, Expired | $6.69 | ' |
Weighted Average Exercise Price, Outstanding, Ending | $4.16 | $4.66 |
Weighted Average Exercise Price, Exercisable | $5.41 | ' |
Weighted Average Exercise Price, Expected to Vest After End of Period | $1.93 | ' |
Weighted Average Remaining Contractual Life (in years), Outstanding | '4 years 10 months 13 days | '6 years 5 months 16 days |
Weighted Average Remaining Contractual Life (in years), Exercisable | '6 years 3 months 11 days | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $3,000 | ' |
Weighted Average Remaining Contractual Life (in years), Expected to Vest after end of period | '8 years 9 months 18 days | ' |
Aggregate Intrinsic Value Outstanding, Ending | ' | 497,695 |
Aggregate Intrinsic Value, Exercisable | 0 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expected to Vest, Outstanding, Aggregate Intrinsic Value | $2,100 | ' |
ShareBased_Payment_Arrangement5
Share-Based Payment Arrangements (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | $1,705,429 | $4,614,769 | $5,518,058 |
Cost of revenues - Product | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | 181 | 262 | 2,960 |
Cost of revenues - Support and Service | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | 136,975 | 172,707 | 461,735 |
Research and development costs | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | 363,296 | 727,826 | 1,302,129 |
Selling and marketing | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | 397,967 | 1,677,469 | 2,023,370 |
General and administrative | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | $807,010 | $2,036,505 | $1,727,864 |
ShareBased_Payment_Arrangement6
Share-Based Payment Arrangements (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | $1,705,429 | $4,614,769 | $5,518,058 |
Restricted stock and restricted stock units | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | 257,843 | 598,447 | 1,379,989 |
Restricted stock and restricted stock units | Directors, officers, and employees | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | 257,843 | 584,959 | 1,358,107 |
Restricted stock and restricted stock units | Non-employee consultants | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Share-based compensation expense | $0 | $13,488 | $21,882 |
ShareBased_Payment_Arrangement7
Share-Based Payment Arrangements (Details 5) | 12 Months Ended |
Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' |
Number of Restricted Stock Awards/Units Non-Vested, Beginning | 171,190 |
Granted | 550,000 |
Vested | -111,000 |
Forfeited | -4,590 |
Number of Restricted Stock Awards/Units Non-Vested, Ending | 605,600 |
ShareBased_Payment_Arrangement8
Share-Based Payment Arrangements (Details 6) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Share-based compensation expense | $1,705,429 | $4,614,769 | $5,518,058 |
Share-based awards | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Share-based compensation expense | 37,379 | 27,487 | 24,369 |
Non-qualified stock options | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Share-based compensation expense | 37,379 | 13,999 | 2,487 |
Restricted stock awards | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Share-based compensation expense | $0 | $13,488 | $21,882 |
ShareBased_Payment_Arrangement9
Share-Based Payment Arrangements (Details 7) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ' |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility Minimum | 61.00% | 60.00% | 56.00% |
Expected volatility Maximum | 64.00% | 61.00% | 61.00% |
Risk-free interest rate Minimum | 0.84% | 0.70% | 1.00% |
Risk-free interest rate Maximum | 1.64% | 1.20% | 2.50% |
Expected term (years) | '5 years 6 months | '5 years 6 months | '5 years 6 months |
Discount for post-vesting restrictions | 'N/A | 'N/A | 'N/A |
Recovered_Sheet1
Share-Based Payment Arrangements (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jul. 03, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |
FalconStor Software, Inc., 2006 Incentive Stock Plan | FalconStor Software, Inc., 2006 Incentive Stock Plan | Non-employee consultants | Directors, officers, and employees | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Total shares available for issuance | ' | ' | ' | 1,169,323 | ' | ' | ' |
Maximum shares outstanding under plan, percentage | ' | ' | ' | 5.00% | ' | ' | ' |
Maximum number of shares authorized (in shares) | ' | ' | ' | 20,000,000 | 13,455,546 | ' | ' |
Total number of shares outstanding (in shares) | 48,031,737 | 47,610,737 | ' | 48,014,717 | ' | ' | ' |
Total shares available for issuance, period increase | ' | ' | ' | 1,231,413 | ' | ' | ' |
Total shares available for issuance, following period increase | ' | ' | ' | 2,400,736 | ' | ' | ' |
Proceeds from stock options, exercised | $697,500 | $738,184 | $920,106 | ' | ' | ' | ' |
Intrinsic value of stock options, exercised | 121,819 | 273,935 | 422,136 | ' | ' | ' | ' |
Recognition of tax benefits related to share-based compensation expense | 0 | 0 | 0 | ' | ' | ' | ' |
Total intrinsic value of restricted stock for which the restrictions lapsed | 202,797 | 1,119,103 | 1,941,382 | ' | ' | ' | ' |
Weighted average fair value of share-based payments granted | $0.84 | $1.36 | $2.11 | ' | ' | ' | ' |
Estimated forfeiture rate for officers | 30.00% | 11.00% | 11.00% | ' | ' | ' | ' |
Estimated forfeiture rate for employees | 30.00% | 24.00% | 24.00% | ' | ' | ' | ' |
Estimated forfeiture rate for directors | 0.00% | 0.00% | 0.00% | ' | ' | ' | ' |
Reduction to share-based compensation expense due to change in forfeiture rates | -84,008 | ' | ' | ' | ' | ' | ' |
Total unrecognized compensation | $2,148,113 | ' | ' | ' | ' | ' | ' |
Weighted-average period of recognition for unrecognized compensation cost | '1 year 10 months 18 days | ' | ' | ' | ' | ' | ' |
Common stock reserved for issuance upon the exercise of stock options, restricted stock and restricted stock units | 12,691,361 | ' | ' | ' | ' | ' | ' |
Options contractual term (maximum) | '10 years | ' | ' | ' | ' | '10 years | '10 years |
Vested period for options granted | ' | ' | ' | ' | ' | '3 years | '3 years |
Recovered_Sheet2
Share-Based Payment Arrangements (Details Narrative 1) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Restricted stock | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Restricted stock, issued | 3,426,068 | 2,876,068 | 2,821,054 |
Restricted stock, vested | 2,342,837 | 2,231,837 | 1,854,007 |
Restricted stock, forfeited | 477,631 | 473,041 | 446,990 |
Restricted stock units | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' |
Restricted stock, issued | 90,412 | 90,412 | 90,412 |
Restricted stock, vested | 79,065 | 79,065 | 73,580 |
Restricted stock, forfeited | 11,347 | 11,347 | 11,000 |
Inventories_Details
Inventories (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory Disclosure [Abstract] | ' | ' |
Component materials | $10,073 | $18,989 |
Finished systems | 909,317 | 623,830 |
Total Inventory | $919,390 | $642,819 |
Inventories_Details_Narrative
Inventories (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory Disclosure [Abstract] | ' | ' |
Reserve for excess and/or obsolete inventories | $0 | $0 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2013 |
Operating Lease Payment | ' |
2014 | $2,595,765 |
2015 | 1,793,759 |
2016 | 1,520,711 |
2017 | 1,465,118 |
2018 | 1,459,190 |
Thereafter | 3,577,335 |
Total Future Minimum Lease Payments Due | $12,411,878 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||
Jul. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Aug. 05, 2013 | Jul. 23, 2013 | Jul. 23, 2013 | Dec. 31, 2013 | |
position | President and Chief Executive Officer | Restructuring Costs Under the 2013 Plan | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total rent expense for operating leases | ' | ' | $3,317,114 | $3,229,294 | $3,054,817 | ' | ' | ' | ' |
Length of warranty of software products (no more than) | ' | ' | '90 days | ' | ' | ' | ' | ' | ' |
Warranty on software products | ' | ' | 'Under the terms of substantially all of its software license agreements, the Company has agreed to indemnify its customers for all costs and damages arising from claims against such customers based on, among other things, allegations that the Companybs software infringes the intellectual property rights of a third party. In most cases, in the event of an infringement claim, the Company retains the right to (i) procure for the customer the right to continue using the software; (ii) replace or modify the software to eliminate the infringement while providing substantially equivalent functionality; or (iii) if neither (i) nor (ii) can be reasonably achieved, the Company may terminate the license agreement and refund to the customer a pro-rata portion of the license fee paid to the Company. Such indemnification provisions are accounted for in accordance with the authoritative guidance issued by the FASB on guarantees. As of December 31, 2013 and 2012, there were no claims outstanding under such indemnification provisions. | ' | ' | ' | ' | ' | ' |
Upon certain triggering events holders can redeem | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' |
Annual salary | ' | ' | ' | ' | ' | ' | ' | 400,000 | ' |
Restricted Shares Grants | ' | ' | ' | ' | ' | 500,000 | 500,000 | ' | ' |
Vesting period for shares granted | ' | ' | ' | ' | ' | ' | ' | '2 years | ' |
Percentage of shares vested, Year 1 | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' |
Percentage of shares vested, Year 2 | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' |
Licensing agreement with Violin Memory | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds received from licensing agreement | ' | ' | 6,000,000 | ' | ' | ' | ' | ' | ' |
Remaining proceeds contingent on successful development | ' | ' | 6,000,000 | ' | ' | ' | ' | ' | ' |
Number of positions eliminated, worldwide | ' | ' | 100 | ' | ' | ' | ' | ' | ' |
Restructuring costs | ' | 1,300,000 | 3,606,020 | 770,749 | 822,320 | ' | ' | ' | 3,600,000 |
Payment of restructuring costs | ' | ' | $2,300,005 | $770,271 | $702,276 | ' | ' | ' | $2,299,527 |
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Details Narrative) (USD $) | Dec. 31, 2013 | Sep. 16, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 |
Interest and other income (loss) | |||||
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' | ' |
Derivative Instruments | $159,134 | $170,337 | ' | ' | ' |
Foreign currency forward contracts outstanding | 0 | ' | 0 | 0 | ' |
Gain on derivative | ' | ' | ' | ' | $11,203 |
Litigation_Details_Narrative
Litigation (Details Narrative) (USD $) | 12 Months Ended | 1 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | |||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Jun. 30, 2013 | Oct. 24, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Jul. 31, 2013 | Dec. 31, 2013 | |
Internal and Government Investigations | Stockholder Litigation | Stockholder Litigation | Stockholder Litigation | Stockholder Litigation | Avazpour Networking Services, Inc | The Estate of ReiJane Huai | Directors and officers liability insurance, layer 1 | Directors and officers liability insurance, layer 1 | Directors and officers liability insurance, layer 2 | Uninsured risk | ||||
Accrued expenses | Prepaid expenses and other current assets | Stockholder Litigation | Stockholder Litigation | Stockholder Litigation | Avazpour Networking Services, Inc | |||||||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Settlement agreement terms | ' | ' | ' | 'The Company entered into a Deferred Prosecution Agreement (DPA) with the USAO.B B Under the DPA, the USAO agreed that it would defer prosecution of the Company in connection with the matter, and ultimately not prosecute the Company if the Company satisfies its obligations during the 18 month term of the DPA. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount forfeited pursuant to settlement | ' | ' | ' | ($2,900,000) | ' | ' | ' | ' | $250,000 | ' | ' | ' | ' | ' |
Period of time Company must satisfy obligations of Deferred Prosecution Agreement | ' | ' | ' | '18 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Civil penalty amount | ' | ' | ' | 2,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated litigation liability | ' | ' | ' | ' | 5,000,000 | ' | 300,000 | ' | ' | ' | ' | ' | ' | ' |
Companybs Directors and Officers (bD&Ob) Insurance Agreement | ' | ' | ' | ' | 'Company entered into an agreement with the carrier of the first $5.0 million layer of the Companybs D&O insurance. Pursuant to this agreement, the Company accepted a payment of $3.9 million from the first layer insurance carrier in satisfaction of the carrierbs obligations to the Company under the first layer D&O insurance policy. In addition, as part of the October 2012 agreement with the carrier, the Company agreed to indemnify the carrier of the first layer of D&O insurance against potential claims by certain named insured persons under the first layer D&O insurance policy. The Company cannot predict the likelihood or the outcome of any such claims by the named insureds. | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Insurance arrangement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | 5,000,000 | ' |
Accrual for the settlement of the class action and derivative lawsuits | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,100,000 | ' | ' | ' |
Costs company is responsible for | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 |
Percentage of losses insurer agreed to pay (maximum) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% | ' |
Insurance coverage floor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,250,000 | ' |
Legal fees | ' | ' | ' | ' | 7,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Insurance recovery | ' | ' | ' | ' | 300,000 | 3,900,000 | ' | ' | ' | ' | 3,900,000 | ' | ' | ' |
Litigation settlement costs the company is responsible for | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,100,000 | ' | ' | ' |
Insurance receivable, amount | ' | ' | ' | ' | 500,000 | 3,900,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Insurance settlement receivable | ' | ' | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' | ' |
Reduction of investigation, litigation and settlement related costs | 373,619 | -326,408 | 10,257,388 | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Voting stock the Company believes to be owned by the Estate (more than 10%) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' |
Damages sought by Company | ' | ' | ' | ' | ' | ' | ' | ' | ' | $10,000,000 | ' | ' | ' | ' |
Restructuring_Costs_Schedule_o
Restructuring Costs - Schedule of Restructuring Costs (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Payment of restructuring costs | $2,300,005 | $770,271 | $702,276 |
Restructuring Costs Under the 2013 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | 0 | ' | ' |
Restructuring, Settlement and Impairment Provisions | 3,606,020 | ' | ' |
Payment of restructuring costs | 2,299,527 | ' | ' |
Ending Balance | 1,306,493 | ' | ' |
Restructuring Costs Under the 2011 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | ' | 120,044 | ' |
Restructuring, Settlement and Impairment Provisions | ' | 0 | ' |
Payment of restructuring costs | ' | 120,044 | ' |
Ending Balance | ' | 0 | ' |
Severance related costs | Restructuring Costs Under the 2013 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | 0 | ' | ' |
Restructuring, Settlement and Impairment Provisions | 3,179,131 | ' | ' |
Payment of restructuring costs | 2,067,554 | ' | ' |
Ending Balance | 1,111,577 | ' | ' |
Severance related costs | Restructuring Costs Under the 2012 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | 478 | 0 | ' |
Restructuring, Settlement and Impairment Provisions | 0 | 770,749 | ' |
Payment of restructuring costs | 478 | 770,271 | ' |
Ending Balance | 0 | 478 | ' |
Severance related costs | Restructuring Costs Under the 2011 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | ' | 94,844 | ' |
Restructuring, Settlement and Impairment Provisions | ' | 0 | ' |
Payment of restructuring costs | ' | 94,844 | ' |
Ending Balance | ' | 0 | ' |
Facility and other costs | Restructuring Costs Under the 2013 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | 0 | ' | ' |
Restructuring, Settlement and Impairment Provisions | 426,889 | ' | ' |
Payment of restructuring costs | 231,973 | ' | ' |
Ending Balance | 194,916 | ' | ' |
Facility and other costs | Restructuring Costs Under the 2011 Plan | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Beginning Balance | ' | 25,200 | ' |
Restructuring, Settlement and Impairment Provisions | ' | 0 | ' |
Payment of restructuring costs | ' | 25,200 | ' |
Ending Balance | ' | $0 | ' |
Restructuring_Costs_Details_Na
Restructuring Costs (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Restructuring costs | $1,300,000 | $3,606,020 | $770,749 | $822,320 |
Payment of restructuring costs | ' | 2,300,005 | 770,271 | 702,276 |
Restructuring Costs Under the 2013 Plan | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Restructuring costs | ' | 3,600,000 | ' | ' |
Payment of restructuring costs | ' | 2,299,527 | ' | ' |
Restructuring Costs Under the 2012 Plan | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Workforce reduction | ' | 100 | 35 | ' |
Severance related costs | Restructuring Costs Under the 2013 Plan | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Payment of restructuring costs | ' | 2,067,554 | ' | ' |
Severance related costs | Restructuring Costs Under the 2012 Plan | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Severance Costs | ' | ' | 800,000 | ' |
Payment of restructuring costs | ' | $478 | $770,271 | ' |
Employee_Benefit_Plans_Details
Employee Benefit Plans (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Compensation and Retirement Disclosure [Abstract] | ' | ' |
Accumulated benefit obligation | $171,651 | $160,279 |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ' | ' |
Projected benefit obligation at beginning of year | 269,760 | 366,158 |
Interest cost | 4,621 | 7,571 |
Actuarial loss (gain) | 23,517 | -126,282 |
Benefits paid | 0 | 0 |
Service cost | 0 | 5,624 |
Currency translation and other | -9,053 | 16,689 |
Projected benefit obligation at end of year | 288,845 | 269,760 |
Changes in plan assets: | ' | ' |
Fair value of plan assets at beginning of year | 108,214 | 92,651 |
Actual return on plan assets | 1,277 | 792 |
Benefits paid | 0 | 0 |
Employer contributions | 8,909 | 9,911 |
Currency translation and other | -3,609 | 4,860 |
Fair value of plan assets at end of year | 114,791 | 108,214 |
Funded status | $174,054 | $161,546 |
Employee_Benefit_Plans_Details1
Employee Benefit Plans (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Components of net periodic pension cost: | ' | ' |
Interest cost | $4,621 | $7,571 |
Expected return on plan assets | -1,854 | -1,916 |
Amortization of net loss | 5,783 | 11,159 |
Service cost | 0 | 5,624 |
Net periodic pension cost | $8,550 | $22,438 |
Employee_Benefit_Plans_Details2
Employee Benefit Plans (Details 2) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Compensation and Retirement Disclosure [Abstract] | ' | ' |
Discount rate | 2.25% | 1.75% |
Rate of increase in compensation levels | 3.00% | 3.00% |
Expected long-term rate of return on plan assets | 2.00% | 1.75% |
Employee_Benefit_Plans_Details3
Employee Benefit Plans (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' |
Employer contributions | $8,909 | $9,911 | ' |
Total amount recognized in other comprehensive income related to pension plan | 16,770 | -129,445 | -67,891 |
Benefit payments expected over the next twelve months | 10,000 | ' | ' |
Benefit payments expected in years 2016 - 2023 | 227,000 | ' | ' |
Foreign defined benefit plan, Taiwan | ' | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' |
Amount included in accumulated other comprehensive income for amounts that have not yet been recognized in net periodic pension cost | 71,892 | 55,122 | ' |
Unrecognized transition obligation included in accumulated other comprehensive income | 28,551 | 35,279 | ' |
Unrecognized actuarial losses included in accumulated other comprehensive income | 43,341 | 19,843 | ' |
Total amount recognized in other comprehensive income related to pension plan | 16,770 | ' | ' |
Actuarial loss recognized | 21,985 | ' | ' |
Recognition of transition obligations in other comprehensive income as a component of net periodic pension cost | 5,215 | ' | ' |
Transition obligation expected to be recognized in net periodic pension cost in 2014 | 5,711 | ' | ' |
Actuarial loss expected to be recognized in net periodic pension cost in 2014 | 761 | ' | ' |
Foreign postretirement plan, Taiwan | ' | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' |
Company contributions to plan, percentage of salary | 6.00% | ' | ' |
Contributions to defined contribution plan | 115,000 | 127,000 | 127,000 |
US Employees | ' | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' |
Employer contributions | $0 | $0 | $0 |
Segment_Reporting_and_Concentr2
Segment Reporting and Concentrations (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Revenues: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Revenues | $14,647,510 | $14,730,038 | $13,974,139 | $15,284,817 | $22,487,683 | $17,089,013 | $16,466,201 | $19,368,072 | $58,636,504 | $75,410,969 | $82,870,602 |
Long-lived assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-lived assets | 11,042,260 | ' | ' | ' | 11,738,879 | ' | ' | ' | 11,042,260 | 11,738,879 | ' |
Americas | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 22,538,045 | 30,505,705 | 36,227,426 |
Long-lived assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-lived assets | 9,712,675 | ' | ' | ' | 10,263,056 | ' | ' | ' | 9,712,675 | 10,263,056 | ' |
Asia Pacific | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 17,128,902 | 24,807,328 | 24,197,054 |
Long-lived assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-lived assets | 717,527 | ' | ' | ' | 1,041,470 | ' | ' | ' | 717,527 | 1,041,470 | ' |
Europe, Middle East, Africa and Other | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Revenues | ' | ' | ' | ' | ' | ' | ' | ' | 18,969,557 | 20,097,936 | 22,446,122 |
Long-lived assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-lived assets | $612,058 | ' | ' | ' | $434,353 | ' | ' | ' | $612,058 | $434,353 | ' |
Segment_Reporting_Details_Narr
Segment Reporting (Details Narrative) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
customer | customer | |
Revenue, Major Customer [Line Items] | ' | ' |
Number of customers who individually accounted for more than ten percent of revenues | ' | 'For the year ended December 31, 2011, the Company did not have any customers that accounted for 10% or more of total revenues. |
Revenue | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' |
Number of customers accounting for greater 10% of gross accounts receivable | 1 | ' |
Accounts Receivable [Member] | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' |
Number of customers accounting for greater 10% of gross accounts receivable | 1 | 1 |
Customer Concentration Risk [Member] | Revenue | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' |
Percentage of revenue accounted for by one customer | 14.00% | 11.00% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' |
Percentage of revenue accounted for by one customer | 12.00% | 20.00% |
Valuation_and_Qualifying_Accou2
Valuation and Qualifying Accounts Allowance for Returns and Doubtful Accounts (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ' | ' | ' |
Balance at Beginning of Period | $940,101 | $1,723,679 | $3,242,458 |
Charges (Benefits) to Expenses / Revenues | -294,074 | 357,301 | 120,992 |
Deductions | 369,725 | 1,140,879 | 1,639,771 |
Balance at End of Period | $276,302 | $940,101 | $1,723,679 |
Valuation_and_Qualifying_Accou3
Valuation and Qualifying Accounts Allowance for Returns and Doubtful Accounts (Details Narrative) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Valuation And Qualifying Accounts Allowance For Returns And Doubtful Accounts Details Narrative | ' | ' | ' |
Cash collections of previously reserved accounts receivable included within revenues (less than) | $0.10 | $0.70 | $0.70 |
Quarterly_Financial_Data_Detai
Quarterly Financial Data (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Quarterly Financial Information Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | $14,647,510 | $14,730,038 | $13,974,139 | $15,284,817 | $22,487,683 | $17,089,013 | $16,466,201 | $19,368,072 | $58,636,504 | $75,410,969 | $82,870,602 |
Gross profit | 11,393,807 | 10,961,078 | 10,149,045 | 10,976,760 | 16,766,610 | 12,208,096 | 11,587,960 | 14,186,230 | 43,480,690 | 54,748,896 | 61,353,693 |
Net loss attributable to common stockholders | $576,864 | ($2,265,599) | ($5,207,293) | ($4,380,445) | ($2,346,276) | ($3,568,051) | ($6,620,586) | ($2,449,408) | ($10,932,590) | ($14,984,321) | ($23,368,283) |
Basic net loss per share attributable to common stockholders (in dollars per share) | $0.01 | ($0.05) | ($0.11) | ($0.09) | ($0.05) | ($0.08) | ($0.14) | ($0.05) | ($0.24) | ($0.32) | ($0.50) |
Diluted net loss per share attributable to common stockholders (in dollars per share) | $0.01 | ($0.05) | ($0.11) | ($0.09) | ($0.05) | ($0.08) | ($0.14) | ($0.05) | ($0.24) | ($0.32) | ($0.50) |
Quarterly_Financial_Data_Unaud1
Quarterly Financial Data (Unaudited) (Detail Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Quarterly Financial Information Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Benefit (expense) recorded representing changes in accounts receivable allowance | ($100,000) | $0 | $0 | $100,000 | $200,000 | $200,000 | ($300,000) | $600,000 | ' | ' | ' |
Gain on sale of cost-method investment | 1,900,000 | ' | ' | ' | ' | ' | ' | ' | 2,096,364 | 0 | 0 |
Restructuring charges | $1,300,000 | ' | ' | ' | ' | ' | ' | ' | $3,606,020 | $770,749 | $822,320 |