Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 22, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | CICERO INC | ||
Entity Central Index Key | 945,384 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 4,806,325 | ||
Entity Common Stock, Shares Outstanding | 192,253,005 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 91 | $ 1,009 |
Trade accounts receivable, net | 278 | 256 |
Prepaid expenses and other current assets | 34 | 235 |
Total current assets | 403 | 1,500 |
Property and equipment, net | 9 | 11 |
Goodwill (Note 4) | 0 | 1,658 |
Total assets | 412 | 3,169 |
LIABILITIES AND STOCKHOLDERS DEFICIT | ||
Short-term debt less unamortized discount (Note 5) | 5,483 | 2,098 |
Accounts payable | 1,032 | 1,336 |
Accrued expenses: | ||
Salaries, wages, and related items | 1,529 | 1,601 |
Interest payable | 2,164 | 2,021 |
Other | 589 | 653 |
Deferred revenue | 748 | 605 |
Total current liabilities | 11,545 | 8,314 |
Long-term debt | 0 | 2,132 |
Total liabilities | 11,545 | 10,446 |
Commitments and contingencies (Notes 12 and 13) | ||
Convertible preferred stock, $0.001 par value, 10,000,000 shares authorized Series | ||
A-1 – No shares issued and outstanding at December 31, 2016 and December 31, 2015; $500 per share liquidation preference | 0 | 0 |
Series B – No shares issued and outstanding at December 31, 2016 and December 31, 2015; $500 per share liquidation preference | 0 | 0 |
Common stock, $0.001 par value, 600,000,000 shares authorized at December 31, 2016 and December 31, 2015; 192,253,005 issued and outstanding at December 31, 2016 and December 31, 2015 (Note 8) | 192 | 192 |
Additional paid-in capital | 246,272 | 246,220 |
Accumulated deficit | (257,597) | (253,689) |
Total stockholders deficit | (11,133) | (7,277) |
Total liabilities and stockholders deficit | $ 412 | $ 3,169 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders deficit: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares series A issued | 0 | 0 |
Preferred stock shares series A outstanding | 0 | 0 |
Preferred stock shares series B issued | 0 | 0 |
Preferred stock shares series B outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 600,000,000 | 600,000,000 |
Common stock shares issued | 192,253,005 | 192,253,005 |
Common stock shares outstanding | 192,253,005 | 192,253,005 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue: | ||
Software | $ 83 | $ 391 |
Maintenance | 885 | 1,479 |
Service | 283 | 73 |
Total operating revenue | 1,251 | 1,943 |
Cost of revenue | ||
Software | 0 | 0 |
Maintenance | 159 | 108 |
Services | 423 | 579 |
Total cost of revenue | 582 | 687 |
Gross margin | 669 | 1,256 |
Operating expenses: | ||
Sales and marketing | 515 | 1,080 |
Research and product development | 1,163 | 1,445 |
General and administrative | 878 | 1,151 |
Goodwill impairment charge | 1,658 | 0 |
Total operating expenses | 4,214 | 3,676 |
Loss from operations before other income (charges) | (3,545) | (2,420) |
Other income (charges): | ||
Interest expense | (450) | (422) |
Other (Note 1) | 87 | (1) |
Total other income/(expense) | (363) | (423) |
Net loss | (3,908) | (2,843) |
8% preferred stock Series B dividend | 0 | (86) |
Deemed dividend applicable to warrant purchase | 0 | (882) |
Net loss applicable to common stockholders | $ (3,908) | $ (3,811) |
Loss per share - basic and diluted | $ (0.02) | $ (0.03) |
Average shares outstanding - basic and diluted | 192,253 | 152,076 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Deficit - USD ($) $ in Thousands | Common Stock | Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 85,848,237 | 11,899 | |||
Beginning Balance, Amount at Dec. 31, 2014 | $ 86 | $ 0 | $ 237,206 | $ (249,878) | $ (12,586) |
Dividend for preferred B stock | (86) | (86) | |||
Conversion of preferred stock, Shares | 11,899,628 | ||||
Conversion of preferred stock, Amount | $ 12 | $ (11,899) | (12) | ||
Issuance of common stock, Shares | 25,000,000 | ||||
Issuance of common stock, Amount | $ 25 | 1,857 | (882) | 1,000 | |
Issuance of stock for payment of debt and interest, Shares | 69,505,140 | ||||
Issuance of stock for payment of debt and interest, Amount | $ 69 | 6,882 | 6,951 | ||
Options issued as compensation | 12 | 12 | |||
Debt discount due to imputed interest | 275 | 275 | |||
Net loss | (2,843) | (2,843) | |||
Ending Balance, Shares at Dec. 31, 2015 | 192,253,005 | 0 | |||
Ending Balance, Amount at Dec. 31, 2015 | $ 192 | $ 0 | 246,220 | (253,689) | (7,277) |
Options issued as compensation | 3 | 3 | |||
Debt discount due to imputed interest | 49 | 49 | |||
Net loss | (3,908) | (3,908) | |||
Ending Balance, Shares at Dec. 31, 2016 | 192,253,005 | 0 | |||
Ending Balance, Amount at Dec. 31, 2016 | $ 192 | $ 0 | $ 246,272 | $ (257,597) | $ (11,133) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (3,908) | $ (2,843) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 5 | 13 |
Stock compensation expense | 3 | 12 |
Amortization of debt discount | 268 | 56 |
Goodwill impairment charge | 1,658 | 0 |
Gain on write down of accrued liability | (87) | 0 |
Changes in assets and liabilities: | ||
Trade accounts receivable | (22) | 779 |
Prepaid expenses and other assets | 201 | 2 |
Accounts payable and accrued expenses | (224) | 709 |
Deferred revenue | 157 | (794) |
Net cash used in operating activities | (1,949) | (2,066) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (3) | (10) |
Net cash used in investing activities | (3) | (10) |
Cash flows from financing activities: | ||
Issuance of common stock | 0 | 1,000 |
Borrowings under short and long-term debt | 1,038 | 2,275 |
Repayments of short and long-term debt | (4) | (210) |
Net cash provided by financing activities | 1,034 | 3,065 |
Net increase in cash | (918) | 989 |
Cash at beginning of year | 1,009 | 20 |
Cash at end of year | 91 | 1,009 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Income taxes | 11 | 10 |
Interest | $ 38 | $ 20 |
1. SUMMARY OF OPERATIONS, SIGNI
1. SUMMARY OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
SUMMARY OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS | Cicero Inc., (‘’Cicero’’ or the ‘’Company’’), is a provider of business integration software which enables organizations to integrate new and existing information and processes at the desktop. Business integration software addresses the emerging need for a company’s information systems to deliver enterprise-wide views of the company’s business information processes. Cicero Inc. was incorporated in New York in 1988 as Level 8 Systems, Inc. and re-incorporated in Delaware in 1999. Going Concern and Management Plans: The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred an operating loss of approximately $3,908,000 for the year ended December 31, 2016, and has a history of operating losses. Management believes that its repositioned dual strategy of leading with its Discovery product to use analytics to measure and then manage how work happens, as well as, concentrating on expanding the indirect channel with more resale and OEM partners will shorten the sales cycle and allow for value based selling to our customers and prospects. The Company anticipates success in this regard based upon current discussions with active customers and prospects. Should the Company be unable to secure customer contracts that will drive sufficient cash flow to sustain operations, the Company will be forced to seek additional capital in the form of debt or equity financing; however, there can be no assurance that such debt or equity financing will be available. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All of the Company’s subsidiaries are wholly owned for the periods presented. All significant inter-company accounts and transactions are eliminated in consolidation. Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates. Significant estimates include the recoverability of long-lived assets, valuation and recoverability of goodwill, stock based compensation, revenue recognition, deferred taxes and related valuation allowances and valuation of equity instruments. Financial Instruments: The carrying amount of the Company’s financial instruments, representing accounts receivable, accounts payable and short-term debt approximate their fair value due to their short-term nature. Cash: The Company places substantially all cash with various financial institutions. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of December 31, 2016, the Company did not exceed these insured amounts. Trade Accounts Receivable: Trade accounts receivable are stated in the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance of doubtful accounts based on its assessment of the current status of individual accounts. Balances still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance of doubtful accounts and a credit to trade accounts receivable. Changes in the allowance for doubtful accounts have not been material to the consolidated financial statements. Property and Equipment: Property and equipment purchased in the normal course of business is stated at cost, and property and equipment acquired in business combinations is stated at its fair market value at the acquisition date. All property and equipment is depreciated using the straight-line method over estimated useful lives. Expenditures for repairs and maintenance are charged to expense as incurred. The cost and related accumulated depreciation of property and equipment are removed from the accounts upon retirement or other disposition and any resulting gain or loss is reflected in the Consolidated Statements of Operations. Long-Lived Assets: The Company reviews the recoverability of long-lived intangible assets when circumstances indicate that the carrying amount of assets may not be recoverable. This evaluation is based on various analyses including undiscounted cash flow projections. In the event undiscounted cash flow projections indicate impairment, the Company would record an impairment based on the fair value of the assets at the date of the impairment. The Company accounts for impairments under the Financial Accounting Standards Board (“FASB”) guidance now codified as Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment.” Accrued Other: Accrued other is primarily comprised of accrued dividends of $447,000 at December 31, 2016 and 2015, respectively, and the remaining balance is comprised of accrued tax, royalty, consulting and other. Revenue Recognition: We derive revenue from three sources: license fees, maintenance and support revenue and professional services. Maintenance and support consists of technical support. Professional services primarily consists of consulting, implementation services and training. Significant management judgments and estimates are made and used to determine the revenue recognized in any accounting period. Material differences may result in changes to the amount and timing of our revenue for any period if different conditions were to prevail. We present revenue, net of taxes collected from customers and remitted to governmental authorities. We apply the provisions of ASC 985-605, Software Revenue Recognition, to all transactions involving the licensing of software products. In the event of a multiple element arrangement for a license transaction, we evaluate the transaction as if each element represents a separate unit of accounting taking into account all factors following the accounting standards. When such estimates are not available, the completed contract method is utilized. Under the completed contract method, revenue is recognized only when a contract is completed or substantially complete. When licenses are sold together with system implementation and consulting services, license fees are recognized upon delivery, provided that (i) payment of the license fees is not dependent upon the performance of the consulting and implementation services, (ii) the services are available from other vendors, (iii) the services qualify for separate accounting as we have sufficient experience in providing such services, have the ability to estimate cost of providing such services, and have vendor-specific objective evidence of fair value, and (iv) the services are not essential to the functionality of the software. We use signed software license and services agreements and order forms as evidence of an arrangement for sales of software, maintenance and support. We use signed engagement letters to evidence an arrangement for professional services. License Revenue We recognize license revenue when persuasive evidence of an arrangement exists, the product has been delivered, no significant obligations remain, the fee is fixed or determinable, and collection of the resulting receivable is probable. In software arrangements that include rights to multiple software products and/or services, we use the residual method under which revenue is allocated to the undelivered elements based on vendor-specific objective evidence of the fair value of such undelivered elements. The residual amount of revenue is allocated to the delivered elements and recognized as revenue, assuming all other criteria for revenue recognition have been met. Such undelivered elements in these arrangements typically consist of software maintenance and support, implementation and consulting services. Software is delivered to customers electronically. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction. We have standard payment terms included in our contracts. We assess collectability based on a number of factors, including the customer’s past payment history and its current creditworthiness. If we determine that collection of a fee is not reasonably assured, we defer the revenue and recognize it at the time collection becomes reasonably assured, which is generally upon receipt of cash payment. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period. We consider a software element to exist when we determine that the customer has the contractual right to take possession of our software. Professional services are recognized as described below under “Professional Services Revenue.” If vendor-specific evidence of fair value cannot be established for the undelivered elements of an agreement, the entire amount of revenue from the arrangement is recognized ratably over the period that these elements are delivered. Maintenance Revenue We use vendor-specific objective evidence of fair value for maintenance and support to account for the arrangement using the residual method, regardless of any separate prices stated within the contract for each element. Maintenance and support revenue is recognized ratably over the term of the maintenance contract, which is typically one year. Maintenance and support is renewable by the customer on an annual basis. Maintenance and support rates, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the arrangement. Professional Services Revenue Included in professional services revenue is revenue derived from system implementation, consulting and training. For software transactions, the majority of our consulting and implementation services and accompanying agreements qualify for separate accounting. We use vendor-specific objective evidence of fair value for the services to account for the arrangement using the residual method, regardless of any separate prices stated within the contract for each element. Our consulting and implementation service contracts are bid on a fixed-fee basis. For fixed fee contracts, where the services are not essential to the functionality, we recognize revenue as services are performed. If the services are essential to functionality, then both the product license revenue and the service revenue are deferred until the services are performed. Training revenue that meets the criteria to be accounted for separately is recognized when training is provided. Cost of Revenue: The primary component of the Company’s cost of revenue for maintenance and services is compensation expense. Advertising Expenses: The Company expenses advertising costs as incurred. Advertising expenses were approximately $117,000 and $217,000 for the years ended December 31, 2016 and 2015, respectively. Research and Product Development: Research and product development costs are expensed as incurred unless such costs meet the software capitalization criteria. Research and development expenses were approximately $1,163,000 and $1,445,000 for the years ended December 31, 2016 and 2015, respectively. Goodwill impairment charge: In 2016, we recorded a non-cash goodwill impairment charge of $1,658,000. We test goodwill for impairment annually on December 31 using a discounted cash flow methodology. Our goodwill impairment test as of December 31, 2016, indicated that the carrying value of our SOAdesk acquisition goodwill exceeded its estimated fair value. Accordingly, we recorded a non-cash, non-tax deductible goodwill impairment charge of $1,658,000 in fiscal year 2016, reducing our goodwill from $1,658,000 to zero. No impairment of goodwill was identified as of December 31, 2015. Other Income/(Charges): Other income/(charges) in fiscal 2016 consists primarily of a write off of certain liabilities deemed no longer payable of $87,000. Income Taxes: The Company uses FASB guidance now codified as ASC 740 “Income Taxes” to account for income taxes. This statement requires an asset and liability approach that recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, all expected future events, other than enactments of changes in the tax law or rates, are generally considered. A valuation allowance is recorded when it is ‘’more likely than not’’ that recorded deferred tax assets will not be realized. (See Note 6.) Loss Per Share: Basic loss per share is computed based upon the weighted average number of common shares outstanding. Diluted loss per share is computed based upon the weighted average number of common shares outstanding and any potentially dilutive securities. During 2016 and 2015, potentially dilutive securities included stock options, warrants to purchase common stock, and preferred stock. The following table sets forth the potential shares that are not included in the diluted net loss per share calculation because to do so would be anti-dilutive for the periods presented: 2016 2015 Stock options 2,832,212 3,657,110 Warrants 207,859,113 207,959,113 Preferred stock -- -- 210,691,325 211,616,223 There was no accrual for dividends on the Series B Preferred Stock in fiscal 2016. $86,000 was accrued for dividends on the Series B Preferred Stock in fiscal year 2015. Stock-Based Compensation: The Company accounts for stock-based compensation to employee under ASC 718 “Compensation – Stock Compensation,” which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The Company did not grant any options in fiscal year 2016 and recognized approximately $3,000 of stock-based compensation. The Company granted 525,000 options in fiscal year 2015 at an exercise price of $0.05 per share and recognized approximately $12,000 of stock-based compensation. The fair value of the Company’s stock-based awards to employees was estimated as of the date of the grant using the Black-Scholes option-pricing model, using the following weighted-average assumptions: 2016 2015 Fair value of common stock -- $ 0.05 Expected life (in years) -- 9.99 years Expected volatility -- 160 % Risk free interest rate -- 2.33 % Expected dividend yield -- 0 % Recent Accounting Pronouncements: In January 2017, the FASB issued ASU Update No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step of the goodwill impairment test under ASC 350. Under previous guidance, if the fair value of a reporting unit is lower than its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate the fair value of any unrecognized intangible assets (including in-process research and development) and any corporate-level assets or liabilities that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under this new guidance if a reporting unit’s carrying value exceeds its fair value, an entity will record an impairment charge based on that difference with such impairment charge limited to the amount of goodwill in the reporting unit. This ASU does not change the guidance on completing Step 1 of the goodwill impairment test. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. This ASU will be applied prospectively and is effective for annual and interim impairment test performed in periods beginning after December 15, 2019 for public business enterprises. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In August 2016, the FASB issued a new accounting standard that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists. The new standard is effective for us in our first quarter of fiscal 2018 and earlier adoption is permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued a new accounting standard intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance includes provisions to reduce the complexity related to income taxes, statement of cash flows, and forfeitures when accounting for share-based payment transactions. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within annual periods ending after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements and related disclosures. The FASB's new leases standard ASU 2016-02 Leases (Topic 842) was issued on February 25, 2016. ASU 2016-02 is intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets referred to as “Lessees” to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. An organization is to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP which requires only capital leases to be recognized on the balance sheet the new ASU will require both types of leases (i.e. operating and capital) to be recognized on the balance sheet. The FASB lessee accounting model will continue to account for both types of leases. The capital lease will be accounted for in substantially the same manner as capital leases are accounted for under existing GAAP. The operating lease will be accounted for in a manner similar to operating leases under existing GAAP, except that lessees will recognize a lease liability and a lease asset for all of those leases. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption will be permitted for all companies and organizations upon issuance of the standard. For calendar year-end public companies, this means an adoption date of January 1, 2019 and retrospective application to previously issued annual and interim financial statements for 2018. See Note 7 for the Company’s current lease commitments. The Company is currently in the process of evaluating the impact that this new leasing ASU will have on its financial statements. In January 2016, the FASB issued a new accounting standard that will enhance the Company’s reporting through the updating of the recognition, measurement, presentation, and disclosure of financial instruments. The new standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within that annual periods. Earlier adoption for public companies is permitted for interim and annual reporting periods as of the beginning of the fiscal year of adoption. The Company does not believe the adoption of this standard will have a material impact on its consolidated financial statements. In August 2014, the FASB issued a new accounting standard that will require management to assess and evaluate whether conditions or events exist, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements issue date. It is effective for annual periods ending after December 15, 2016 and for annual and interim periods thereafter. early adoption is permitted. The adoption of this standard did not have a material impact on our consolidated financial statements. In May 2014, the FASB issued a new accounting standard update on revenue recognition from contracts with customers. The new guidance will replace most current U.S. GAAP guidance on this topic and eliminate most industry-specific guidance. According to the new guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet selected a transition method and is evaluating the impact of adopting this new accounting standard update on the consolidated financial statements and related disclosures. We expect to identify similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified. As a result, we expect timing of our revenue to be very similar to how we record revenue currently. |
2. ACCOUNTS RECEIVABLE
2. ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | Trade accounts receivable was composed of the following at December 31 (in thousands): 2016 2015 Current trade accounts receivable $ 278 $ 256 |
3. PROPERTY AND EQUIPMENT
3. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment was composed of the following at December 31 (in thousands): 2016 2015 Computer equipment $ 138 $ 160 Furniture and fixtures 19 24 Office equipment 35 35 193 219 Less: accumulated depreciation (184 ) (208 ) $ 9 $ 11 Depreciation expense of property and equipment was $5,000 and $13,000 for the years ended December 31, 2016 and 2015, respectively. |
4. INTANGIBLE ASSET, NET AND GO
4. INTANGIBLE ASSET, NET AND GOODWILL | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
INTANGIBLE ASSET, NET AND GOODWILL | The Company accounts for goodwill in accordance ASC Topic 350 “Intangibles – Goodwill and Other” which requires that goodwill and intangible assets with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. Goodwill includes the excess of the purchase price over the fair value of net assets acquired of $2,832,000 in connection with the SOAdesk LLC acquisition in 2010. ASC Topic 350 requires that goodwill be tested for impairment at the reporting unit level. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Pursuant to accounting guidance, the Company may elect to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The Company is not required to calculate the fair value of a reporting unit unless the Company determines that it is more likely than not that its fair value is less than its carrying amount. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test is performed. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying value exceeds its fair value, the second step would need to be conducted; otherwise, no further steps are necessary as no potential impairment exists. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of that goodwill. Any excess of the goodwill carrying value over the respective implied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. Upon completion of the fiscal year 2016 test, the goodwill of our SOA acquisition was determined to be impaired and the Company recorded an impairment charge of $1,658,000. There was no impairment of goodwill in year 2015. Goodwill Balance at December 31, 2014 $ 1,658,000 Additions -- Impairment -- Balance at December 31, 2015 1,658,000 Additions -- Impairment 1,658,000 Balance at December 31, 2016 $ -- |
5. DEBT
5. DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | Debt and notes payable to related parties consists of the following (in thousands): December 31, 2015 December 31, 2015 Note payable – asset purchase agreement (a) $ 1,518 $ 1,518 Note payable – related parties (b) 2,879 1,845 Notes payable (c) 1,086 1,086 Unamortized debt discount (b) -- (219 ) Total debt 5,483 4,230 Less current portion -- (2,098 ) Total long term debt $ -- $ 2,132 (a) In January 2010, the Company entered into an unsecured convertible promissory note with SOAdesk for $700,000 with an annual interest rate of 5%. The note was originally scheduled to mature on March 31, 2010 but was subsequently amended and through a series of amendments, the maturity date was extended to June 30, 2015. In June 2015, the note was amended and the maturity date was extended to June 30, 2017. In July 2015, the Company paid $25,000 toward the principal amount of the note. At December 31, 2015, the Company was indebted to SOAdesk in the amount of $675,000 in principal and $208,000 in interest. At December 31, 2016, the Company was indebted to SOAdesk in the amount of $675,000 in principal and $242,000 in interest. In June 2015, the note was amended so that the note is convertible into shares of the Company’s common stock at the rate of one share for every $0.15 of principal and interest due under the note from the original conversion to shares of Series B Convertible Preferred Stock at the rate of one share per every $150 of principal and interest due under the note. The note was further amended that should the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) exceed $1,000,000 in either 12 month period beginning June 30, 2015 and June 30, 2016, respectively, then the Company shall repay, in cash, a portion of the outstanding principal of the note at the rate of $0.50 for each $1.00 that exceeds the EBITDA threshold. The note is convertible at the holder’s option at any time or at maturity. As part of a prior acquisition, the Company was obligated to certain earn-out obligation payments of up to $2,410,000 over an 18 month period from January 15, 2010 through July 31, 2011, based upon the achievement of certain revenue performance targets. The earn-out was payable fifty percent in cash and fifty percent in common stock of the Company at the rate of one share for every $0.15 earn-out payable. The Company had recorded $842,606 in its accounts payable as of December 31, 2014 due to a portion of earn-out obligations being met. In June 2015, the Company entered into a promissory note with SOAdesk for fifty percent of the earn-out payable ($421,303) to SOAdesk. The maturity date of the note is December 31, 2015 with an annual interest rate of 10%. In December 2015, the maturity date was extended to December 31, 2016. In December 2016, the maturity date was extended to December 31, 2017. Included in the amendment were two milestone payments of $62,500 each to be applied to interest and then principal and payable on June 1, 2017 and December 1, 2017, respectively. The Company’s Chairman has agreed to personally guarantee these, and only these, milestone payments. At December 31, 2015, the Company was indebted to SOAdesk for $421,303 in principal and approximately $21,000 in interest. At December 31, 2016, the Company was indebted to SOAdesk for $421,303 in principal and approximately $63,000 in interest. The Company also entered into a convertible promissory note with SOAdesk for fifty percent of the earn-out payable ($421,303) with a maturity date of June 30, 2017 that was non-interest bearing. The note is only convertible into shares of the Company’s common stock at the rate of one share for every $0.15 of principal due under the note. The note is convertible at the holder’s option at any time or at maturity. At December 31, 2015 and 2016 the Company was indebted to SOAdesk for $421,303 in principal. (b) From time to time during 2012 through 2015, the Company entered into several short-term notes payable with John L. (Launny) Steffens, the Chairman of the Board of Directors, for various working capital needs. The notes bear interest at 12% per year, are unsecured and mature on June 30, 2015. At December 31, 2014, the Company was indebted to Mr. Steffens in the approximate amount of $6,691,000 of principal and $1,139,000 in interest. On April 8, 2015, the Company entered into an Exchange Agreement with Mr. Steffens to convert an aggregate of $6,950,514 of principal amount of debt into 69,505,140 shares of the Company’s common stock at a conversion rate of $0.10 per share. Subsequent to the exchange agreement, the Company entered into several short term notes payable with Mr. Steffens for various working capital needs in fiscal 2015 and 2016. The notes vary from non-interest bearing to interest rates of 12% with a maturity date of December 31, 2015. The Company is obligated to repay the notes with the collection of any accounts receivables. The Company had repaid $170,000 in principal as of December 31, 2015. In December 2015, the maturity dates were extended to December 31, 2016. At December 31, 2015, the Company was indebted to Mr. Steffens in the approximate amount of $1,845,000 of principal and $1,362,000 of interest. At December 31, 2015, the Company recorded $275,000 of unamortized discount on debt on the non-interest bearing notes with Mr. Steffens. Imputed interest was calculated based on a 12% interest rate based on historical notes with Mr. Steffens and comparative non-related party loans with the Company. The Company has recorded $56,000 of amortization of the debt discount in interest expense through December 31, 2015. In 2016, the Company recorded an additional $50,000 of unamortized discount on debt on non-interest bearing debt issued in fiscal 2016. Imputed interest was calculated based on a 12% interest rate based on historical notes with Mr. Steffens and comparative non-related party loans with the Company. The Company has recorded $266,000 of amortization of the debt discount in interest expense through December 31, 2016. In December 2016, the maturity dates were extended to June 30, 2017. Additionally notes totaling $2,269,000 that were previously non-interest bearing were amended to an annual interest rate of 10%. At December 31, 2016, the Company was indebted to Mr. Steffens in the approximate amount of $2,879,000 of principal and $1,380,000 of interest. (c) The Company has issued a series of short-term unsecured promissory notes with private lenders, which provide for short term borrowings. The notes in the aggregate principal amount of $50,000 of principal and $53,000 of interest and $50,000 of principal and $64,000 of interest, respectively, as of December 31, 2015 and December 31, 2016, bear interest between 10% and 36% per annum. In March 2014, the Company reclassified to short-term debt its unsecured convertible promissory note with SOAdesk that was entered into as part of the Asset Purchase Agreement with SOAdesk for $1,000,000 with an annual interest rate of 5% and a maturity date of January 14, 2015. In March 2012, SOAdesk elected to convert $300,000 of the outstanding note balance into 2,000,000 shares of the Company’s Common Stock. Through a series of amendments, the note was amended to extend the maturity date until June 30, 2015. In June 2015, the note was amended to extend the maturity date until June 30, 2017. The note was further amended that should the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) exceed $1,000,000 in either 12 month period beginning June 30, 2015 and June 30, 2016, respectively, then the Company shall repay, in cash, a portion of the outstanding principal of the note at the rate of $0.50 for each $1.00 that exceeds the EBITDA threshold. At December 31, 2015, the Company was indebted to SOAdesk in the amount of $700,000 in principal and $242,000 in interest. At December 31, 2016, the Company was indebted to SOAdesk in the amount of $700,000 in principal and $277,000 in interest. The note is only convertible into shares of the Company’s common stock at the rate of one share for every $0.15 of principal and interest due under the note. In June 2014, the Company reclassified to short-term debt its unsecured promissory note with a private lender that was originally entered into in March 2012 for $336,000 at an interest rate of 12% and a maturity date of March 31, 2013. In March 2013, the maturity date of the note was extended to June 30, 2015. In June 2015, the maturity date of the note was extended to June 30, 2017, a repayment schedule of quarterly principal and interest payments of $12,000 beginning on September 30, 2015 and two milestone payments of $125,000 on February 28, 2016 and 2017, respectively were added. In February 2016, the note was amended that the first milestone payment due on February 29, 2016, was now payable quarterly beginning February 29, 2016 through November 29, 2016. At December 31, 2015, the Company was indebted to this private lender in the amount of $336,000 in principal and $134,000 in interest. At December 31, 2016, the Company was indebted to this private lender in the amount of $336,000 in principal and $137,000 in interest. |
6. INCOME TAXES
6. INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company follows the provisions of ASC Topic 740, “Income Taxes,” and recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement with the relevant tax authority. The Company applies ASC Topic 740 to all tax positions for which the statute of limitations remains open. The Company has identified its federal tax return and its state tax return in North Carolina as “major” tax jurisdictions. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements. The evaluation was performed for the tax years 2014 through 2016, and may be subject to audits for amounts related to net operating loss carryforwards generated in periods prior to December 31, 2013. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. The tax returns for the prior three years are generally subject to review by federal and state taxing authorities. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. There were no amounts accrued for penalties and interest as of or during the period for the tax years 2016 and 2015. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payment, accruals or material deviations from its position. A reconciliation of expected income tax at the statutory federal rate with the actual income tax provision is as follows for the years ended December 31 (in thousands): 2016 2015 Expected income tax benefit at statutory rate (34%) $ (1,329 ) $ (967 ) State taxes, net of federal tax benefit (160 ) (170 ) Effect of change in valuation allowance (1,249 ) (5,860 ) Non-deductible expenses 1 3 Change in state tax rate 2,737 Expiration of net operating loss deductions — 6,994 Total $ — $ — Significant components of the net deferred tax asset at December 31 were as follows: 2016 2015 Accrued expenses, non-tax deductible $ 15 $ 7 Deferred revenue 281 242 Contingent payments (788 ) (831 ) Stock compensation expense 593 621 Loss carryforwards 54,802 56,583 Depreciation and amortization 1,436 966 56,339 57,588 Less: valuation allowance (56,339 ) (57,588 ) $ — $ — At December 31, 2016, the Company had net operating loss carryforwards of approximately $143,842,000, which may be applied against future taxable income. These carryforwards will expire at various times between 2020 and 2036. Net operating loss carryforwards include tax deductions for the disqualifying dispositions of incentive stock options. When the Company utilizes the net operating losses related to these deductions, the tax benefit will be reflected in additional paid-in capital and not as a reduction of tax expense. The total amount of these deductions included in the net operating loss carryforwards is $21,177,000. The Company provided a full valuation allowance on the total amount of its deferred tax assets at December 31, 2016 and 2015 since management does not believe that it is more likely than not that these assets will be realized. In accordance with Section 382 of the Internal Revenue Code of 1986, as amended, a change in equity ownership of greater than 50% of the Company within a three-year period can result in an annual limitation on the Company’s ability to utilize its NOL carryforwards that were created during tax periods prior to the change in ownership. In December 2014, the Company completed a Section 382 study which concluded that an ownership change occurred for the three year testing period ended March 2000 but that no other ownership change occurred through December 2014 leaving our NOL carryforwards balance at December 31, 2014 at approximately $136,914,000. |
7. STOCKHOLDER'S EQUITY
7. STOCKHOLDER'S EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY | At the Company’s Annual Meeting held on September 11, 2015, the shareholders approved the following proposals: 1. An amendment to the Company’s Amended and Restated Certificate of Incorporation (“Charter”) to increase the number of authorized shares of common stock, par value $0.001 per share, from 215,000,000 to 600,000,000; 2. An amendment to the Company’s Charter to allow stockholders to be able to act by written consent only while Privet Fund LP and its affiliates (a “Privet Stockholder”) own an aggregate of at least 30% of the Company’s outstanding voting stock; 3. An amendment to the Company’s Charter to provide that only the Board of Directors may call a special meeting of stockholders of the Company; 4. An amendment to the Company’s Charter to renounce the Company’s expectancy regarding certain corporate opportunities presented to a Privet Stockholder; 5. An amendment to the Company’s Charter to not be governed by the provisions of Section 203 of the Delaware General Corporation Law; 6. An amendment to the Company’s Charter establishing the courts located within the State of Delaware as the exclusive forum for the adjudication of certain legal actions by the stockholders; and 7. An amendment to the Company’s Charter to authorize 10,000,000 shares of “blank check” preferred stock, par value $0.001 per share. Also at the Annual Meeting, the holders of the Company’s Series A-1 Convertible Preferred Stock approved an amendment to Article IV (Conversion) of the Series A-1 Convertible Preferred Stock Certificate of Designations to the effect that the Series A-1 Preferred Stock automatically converted into common stock as a result of the Company consummation of an equity financing of at least $1,000,000 on July 15, 2015; and the holders of the Company’s Series B Convertible Preferred Stock approved an amendment to Section 6 (Automatic Conversion) of the Series B Convertible Preferred Stock Certificate of Designations to the effect that the Series B Preferred Stock automatically converted into common stock as a result of the Company consummation of an equity financing of at least $1,000,000 on July 15, 2015 (see below). On July 15, 2015, the Company entered into a Stock and Warrant Purchase Agreement (the “Purchase Agreement”) with investors named therein, including Privet Fund LP (“Privet”), five directors of the Company, including John L. Steffens, Donald Peppers, Bruce D. Miller, Mark Landis, and Thomas Avery, and three other persons (collectively the nine investors are referred to as the “Purchasers”), pursuant to which the Purchasers severally purchased, in the aggregate, 25,000,000 shares of the Company’s common stock and warrants to purchase up to an aggregate of 205,277,778 shares of the Company’s common stock (“Warrants”) for an aggregate consideration of $1,000,000. The Warrants are exercisable for a period of three years beginning at any time after 60 days of issuance. The exercise prices of the Warrants are as follows: (i) Warrants to purchase up to 87,500,000 shares of the Company’s common stock are exercisable at a price of $0.04 per share (“Tranche I”); (ii) Warrants to purchase up to 77,777,778 shares of the Company’s common stock are exercisable at a price of $0.045 per share (“Tranche II”); and (iii) Warrants to purchase up to 40,000,000 shares of the Company’s common stock are exercisable at a price of $0.05 per share (“Tranche III”). The Warrants are exercisable only for cash, as the exercise price paid is intended to increase the funding of the Company. All the exercise prices and numbers of shares are subject to customary anti-dilution provisions. The Warrants contain an exercise limitation provision that prohibits exercise of the Warrants to the extent that the exercise would result in the issuance of shares of the Company’s common stock that would cause either (a) the Company to be deemed an investment company under the Investment Company Act of 1940, as amended, or (b) an ownership change within the meaning of Internal Revenue Code Section 382 (and applicable U.S. Treasury regulations pursuant to such section) limiting the use of the Company’s net operating losses, carryforwards and other tax attributes. The Company is obligated to reserve a sufficient number of shares of the Company’s common stock to enable the exercise of the Warrants. The use of proceeds from this transaction are for general corporate purposes, as approved from time to time by the Board of Directors (the “Board”), which approval must include approval by a majority of the directors that have been designated by Privet. In connection with the execution of the Purchase Agreement, the Company entered into an Investor Rights Agreement with Privet and Mr. Steffens (the “Investors”), granting the Investors the right to require the Company to file with the Securities and Exchange Commission up to four requested registration statements to register for resale the Investors’ shares of common stock purchased under the Purchase Agreement and purchased upon exercise of any of the Warrants (the “Registrable Securities”). The Investors also are granted unlimited “piggy-back” registration rights with respect to the Registrable Securities. The obligation to register the Registrable Securities continues until those securities have been sold or transferred by the holders of the registration rights or may be sold without limitation under Rule 144 or otherwise may be sold without restriction. As a result of the transaction, (i) Privet became the record holder of approximately 10.1% of the outstanding and issued shares of common stock, and has the right to purchase under the Warrants an additional 149,852,778 shares of common stock which would correspondingly increase its percentage of ownership and it has the right to appoint directors, and (ii) Mr. Steffens decreased his current 65.5% ownership of the common stock of the Company to 59.3%, while retaining his current control position in the common stock. Together Privet and Mr. Steffens, excluding the exercise of the Warrants, have a majority of the voting control of the Company. Preferred Stock In April 2010, the Company issued to a certain accredited investor 1,333 shares of Series B Convertible Preferred Stock at $150 per share for a total of $200,000. The Series B Convertible Preferred Stock bore an annual dividend of 8%. The Series B stock would have converted into common stock at a conversion rate of $0.15 per share. Additionally, the Series B stock provided 333,333 warrants to purchase common stock of the Company at a strike price of $0.25 per share. The warrants expired in April 2015. In January 2010, the Company issued to certain accredited investors 9,067 shares of Series B Convertible Preferred Stock at $150 per share for a total of $1,360,000, including $500,000 in cash, the cancellation of $710,000 of existing indebtedness. The Series B Convertible Preferred Stock bore an annual dividend of 8%. The Series B would have converted into common stock at a conversion rate of $0.15 per share. Additionally, the Series B stock investors were issued 2,266,667 warrants to purchase common stock of the Company at a strike price of $0.25 per share. The warrants expired in January 2015. All shares of the Company’s Series B Preferred Stock were automatically converted into shares of the common stock as a result of an amendment to the Company’s Series B Convertible Preferred Stock Certificate of Designations approved by the holders of the Series B preferred stock at Company’s Annual Meeting held on September 11, 2015. Common Stock On April 8, 2015, the Company entered into agreement with John L. Steffens, the Chairman of the Board of Directors, to convert $6,950,514 of principal amount of debt into 69,505,140 share of the Company’s common stock. (See Note 5) The Company accounted for the transaction pursuant to Topic ASC 470-50, Modification and Extinguishment of Debt. Due to the fact that the transaction was with Mr. Steffens, the Company’s Chairman of the Board, the Company determined that this was not an arm’s length agreement and as such has recorded the entire transaction through additional paid in capital. We had no such transactions in 2016. Stock Grants None. Stock Options In 2007, the Board of Directors approved the 2007 Cicero Employee Stock Option Plan which permits the issuance of incentive and nonqualified stock options, stock appreciation rights, performance shares, and restricted and unrestricted stock to employees, officers, directors, consultants, and advisors. The aggregate number of shares of common stock which may be issued under this Plan shall not exceed 4,500,000 shares upon the exercise of awards and provide that the term of each award be determined by the Board of Directors. The Company also has a stock incentive plan for outside directors and the Company has set aside 1,200 shares of common stock for issuance under this plan. Under the terms of the Plans, the exercise price of the stock options may not be less than the fair market value of the stock on the date of the award and the options are exercisable for a period not to exceed ten years from date of grant. Stock appreciation rights entitle the recipients to receive the excess of the fair market value of the Company's stock on the exercise date, as determined by the Board of Directors, over the fair market value on the date of grant. Performance shares entitle recipients to acquire Company stock upon the attainment of specific performance goals set by the Board of Directors. Restricted stock entitles recipients to acquire Company stock subject to the right of the Company to repurchase the shares in the event conditions specified by the Board are not satisfied prior to the end of the restriction period. The Board may also grant unrestricted stock to participants at a cost not less than 85% of fair market value on the date of sale. Options granted vest at varying periods up to five years and expire in ten years. Activity for stock options issued under these plans for the years ending December 31, 2016 and 2015 was as follows: Number of Options Option Price Per Share Weighted Average Exercise Price Aggregate Intrinsic Value Balance at December 31, 2014 3,150,110 0.02-0.51 $ 0.24 Granted 525,000 0.05 $ 0.05 Forfeited (10,000 ) 0.09 $ 0.09 Expired (8,000 ) 0.51 $ 0.51 Balance at December 31, 2015 3,657,110 0.03-0.51 $ 0.21 Granted -- -- -- Forfeited (770,898 ) 0.02-0.51 $ 0.11 Expired (54,000 ) 0.02-0.51 0.11 Balance at December 31, 2016 2,832,212 0.05-0.51 $ 0.24 $ 0.00 Activity for non-vested stock options under these plans for the fiscal year ending December 31, 2016 and 2015 was as follows: Number of Options Option Price Per Share Weighted Average Exercise Price Balance at December 31, 2014 18,333 0.02-0.05 $ 0.04 Granted 525,000 0.05 $ 0.05 Vested (188,332 ) 0.05 $ 0.05 Forfeited -- --- -- Balance at December 31, 2015 355,001 0.05 $ 0.05 Granted -- -- -- Vested (104,702 ) 0.05 $ 0.05 Forfeited (145,599 ) 0.05 $ 0.05 Balance at December 31, 2016 104,700 0.05 $ 0.05 There were no options granted in 2016 and 525,000 options granted during 2015. The weighted average grant date fair value of options issued during the years ended December 31, 2015 was equal to $0.05. There were no option grants issued below fair market value during 2015. At December 31, 2016, there was unrecognized compensation cost of $2,800 related to stock options which is expected to be recognized over a weighted-average amortization period of six months. At December 31, 2016 and 2015, options to purchase 2,752,512 and 3,302,109 shares of common stock were exercisable, respectively, pursuant to the plans at prices ranging from $0.05 to $0.51 . The following table summarizes information about stock options outstanding at December 31, 2016: Exercise Price Number Outstanding Remaining Contractual Life for Options Outstanding Number Exercisable Weighted Average Exercise Price $ 0.05-0.06 479,102 7.3 374,402 $ 0.05 0.07-0.08 500,000 4.6 500,000 0.07 0.09-0.37 787,750 3.4 787,750 0.10 0.38-0.51 1,065,360 0.7 1,065,360 0.51 2,832,212 3.2 2,727,512 $ 0.25 Preferred Stock As of July 15, 2015, all preferred shares for Series A-1 and Series B converted to common stock. Series A-1 The Series A-1 preferred stock provides rights and preferences set forth in the Certificate of Designations filed with the Secretary of State of the State of Delaware. The Series A-1 preferred stock was convertible at any time at the option of the holder into an initial conversion ratio of 1,000 shares of common stock for each share of Series A-1 preferred stock. The initial conversion ratio shall be adjusted in the event of any stock splits, stock dividends and other recapitalizations. The Series A-1 preferred stock was also convertible on an automatic basis in the event that (i) the Company closes on an additional $5,000,000 equity financing from strategic or institutional investors, or (ii) the Company has four consecutive quarters of positive cash flow as reflected on the Company’s consolidated financial statements prepared in accordance with generally accepted accounting principles (GAAP) and filed with the Securities Exchange Commission. The Series A-1 preferred stock are entitled to receive equivalent dividends on an as-converted basis whenever the Company declares a dividend on its common stock, other than dividends payable in shares of common stock. The holders of the Series A-1 preferred stock are entitled to a liquidation preference of $500 per share of Series A-1 preferred stock upon the liquidation of the Company. The Series A-1 preferred stock are not redeemable. The Series A-1 preferred stock provides the following voting rights. Each share of Series A-1 preferred stock represents that number of votes equal to the number of shares of common stock issuable upon conversion of a share of Series A-1 preferred stock. The holders of Series A-1 preferred stock, the series B preferred stock (see below) and the holders of common stock would vote together as a class on all matters except: (i) regarding the election of the Board of Directors of the Company (as set forth below); (ii) as required by law; or (iii) regarding certain corporate actions to be taken by the Company (as set forth below). The approval of at least two-thirds of the holders of Series A-1 preferred stock voting together as a class, would be required in order for the Company to: (i) merge or sell all or substantially all of its assets or to recapitalize or reorganize; (ii) authorize the issuance of any equity security having any right, preference or priority superior to or on parity with the Series A-1 preferred stock; (iii) redeem, repurchase or acquire indirectly or directly any of its equity securities, or to pay any dividends on the Company’s equity securities; (iv) amend or repeal any provisions of its certificate of incorporation or bylaws that would adversely affect the rights, preferences or privileges of the Series A-1 preferred stock; (v) effectuate a significant change in the principal business of the Company as conducted at the effective time of the Recapitalization; (vi) make any loan or advance to any entity other than in the ordinary course of business unless such entity is wholly owned by the Company; (vii) make any loan or advance to any person, including any employees or directors of the Company or any subsidiary, except in the ordinary course of business or pursuant to an approved employee stock or option plan; and (viii) guarantee, directly or indirectly any indebtedness or obligations, except for trade accounts of any subsidiary arising in the ordinary course of business. In addition, the unanimous vote of the Board of Directors is required for any liquidation, dissolution, recapitalization or reorganization of the Company. The voting rights of the holders of Series A-1 preferred stock set forth in this paragraph shall be terminated immediately upon the closing by the Company of at least an additional $5,000,000 equity financing from strategic or institutional investors. In addition to the voting rights described above, the holders of a majority of the shares of Series A-1 preferred stock are entitled to appoint two observers to the Company’s Board of Directors who would be entitled to receive all information received by members of the Board of Directors, and would attend and participate without a vote at all meetings of the Company’s Board of Directors and any committees thereof. At the option of a majority of the holders of Series A-1 preferred stock, such holders may elect to temporarily or permanently exchange their board observer rights for two seats on the Company’s Board of Directors, each having all voting and other rights attendant to any member of the Company’s Board of Directors. As part of the Recapitalization, the right of the holders of Series A-1 preferred stock to elect a majority of the voting members of the Company’s Board of Directors shall be terminated. Series B The Series B Preferred Stock ranks senior to the common stock and on parity with the Company’s outstanding Series A-1 Preferred Stock. As required by the Certificate of Designations applicable to the Series A-1 Preferred Stock, the Company obtained the consent of a holder representing in excess of two-thirds of the outstanding shares of Series A-1 Preferred Stock to authorize and issue the shares of Series B Preferred Stock. Dividends would accrue on each share of Series B Preferred Stock at the rate per annum of eight percent (8%). Dividends would accrue from the date on which a share of Series B Preferred Stock was issued by the Company until paid, whether or not declared, and shall be cumulative; provided however Series B Certificate Each share of Series B Preferred Stock is convertible, at the option of the holder, into that number of shares of common stock equal to $150.00 (the “ Series B Original Issue Price In the event of certain specified liquidation events, the holders of Series B Preferred Stock would be entitled to receive an amount per share equal to the Series B Original Issue Price plus any dividends accrued or declared but unpaid thereon before the payment of any amount to the holders of common stock and other junior securities. The holders of Series B Preferred Stock would be entitled to vote, on an as-converted basis, on all matters submitted to a vote of the stockholders of the Company, and the holders of Series B Preferred Stock, Series A-1 Preferred Stock and common stock will vote together as a single class. In addition, until such time as the Company consummates at least an additional $5,000,000 equity financing from institutional or strategic investors, the approval of the holders of at least 2/3 of the outstanding shares of the Series B Preferred Stock voting together separately as a class will be required for the Company to take certain specified actions set forth in the Series B Certificate. Stock Warrants: The Company values warrants based on the Black-Scholes pricing model. In accordance with ASC 815, these warrants are classified as equity. The warrants were issued in conjunction with certain promissory notes and the private investment in the Company’s shares. At December 31, 2016, there were 207,859,113 exercisable warrants outstanding at an exercise price between $0.04 and $0.20 per share. Number of Warrants Warrant Price Per Share Weighted Average Exercise Price Balance at December 31, 2014 5,281,333 $ 0.08-$0.25 $ 0.22 Issued 205,277,780 $ 0.04-$0.05 $ 0.05 Exercised -- -- -- Forfeited (2,600,000 ) $ 0.25 $ 0.25 Balance at December 31, 2015 207,959,113 $ 0.04-$0.20 $ 0.05 Issued -- -- -- Exercised -- -- -- Forfeited (100,000 ) $ 0.08 $ 0.08 Balance at December 31, 2016 207,859,113 $ 0.04-$0.20 $ 0.05 |
8. EMPLOYEE BENEFIT PLANS
8. EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
EMPLOYEE BENEFIT PLANS | The Company sponsors one defined contribution plan for its employees - the Cicero Inc. 401(K) Plan. Under the terms of the Plan, the Company, at its discretion, provides a 50% matching contribution up to 6% of an employee’s salary. Participants must be eligible and employed at December 31 of each calendar year to be eligible for employer matching contributions. The Company opted not to make any matching contributions for 2016 and 2015. |
9. SIGNIFICANT CUSTOMERS AND CO
9. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK | In 2016, two customers accounted for 40% and 33%, respectively, of operating revenues and two customers accounted for 78% and 15% of accounts receivable at December 31, 2016. In 2015, two customers accounted for 51% and 16%, respectively, of operating revenues and one customer accounted for 98% of accounts receivable at December 31, 2015. In 2016, one vendor accounted for 65% of accounts payable at December 31, 2016. In 2015, two vendors accounted for 53% and 12%, respectively, of accounts payable at December 31, 2015. |
10. RELATED PARTY INFORMATION
10. RELATED PARTY INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Investments, Other than Investments in Related Parties [Abstract] | |
RELATED PARTY INFORMATION | Fro m time to time during 2012 through 2016, the Company entered into several short-term notes payable with John L. (Launny) Steffens, the Chairman of the Board of Directors, for various working capital needs. The notes bear interest at 12% per year and are unsecured. In March 2014, Mr. Steffens agreed to extend the maturity date of all outstanding short-term notes until June 30, 2015. At December 31, 2014, the Company was indebted to Mr. Steffens in the approximate amount of $6,691,000 of principal and $1,139,000 in interest. In April 2015, the Company entered into agreement with Mr. Steffens to convert $6,950,514 of principal amount of debt into 69,505,140 share of the Company’s common stock. Subsequent to the exchange agreement, the Company entered into several short term notes payable with Mr. Steffens for various working capital needs. The notes vary from non-interest bearing to interest rate of 12% with a maturity date of December 31, 2015. The Company is obligated to repay the notes with the collection of any accounts receivable. The Company had repaid $170,000 in principal as of December 31, 2015. In December 2015, the maturity dates were extended to December 31, 2016. At December 31, 2015, the Company was indebted to Mr. Steffens in the approximate amount of $1,845,000 of principal and $1,362,000 of interest. At December 31, 2016, the maturity dates were extended to June 30, 2017. Additionally all notes that were non-interest bearing were amended to an annual interest rate of 10%. At December 31, 2016, the Company was indebted to Mr. Steffens in the approximate amount of $2,879,000 of principal and $1,380,000 of interest. In June 2015, the Company entered into a promissory note with SOAdesk for fifty percent of the earn-out payable ($421,303) to SOAdesk. The maturity date of the note is December 31, 2015 with an annual interest rate of 10%. In December 2015, the maturity date was extended to December 31, 2016. In December 2016, the maturity date was extended to December 31, 2017. Included in this last amendment were two milestone payments of $62,500 each to be paid to interest first and then principal and payable on June 1, 2017 and December 1, 2017, respectively. The Company’s Chairman has agreed to personally guarantee these, and only these, milestone payments. Antony Castagno, the Company’s Chief Technology Officer, is part-owner of SOAdesk LLC, which was acquired by the Company in 2010. In January 2016, the Company entered into a short term note payable for $3,500 with Mr. Castagno for various working capital needs. The note bears interest of 10% and was unsecured. The note and interest was repaid in full in February 2016. |
11. COMMITMENTS AND EMPLOYMENT
11. COMMITMENTS AND EMPLOYMENT AGREEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND EMPLOYMENT AGREEMENTS | In June 2014, the Company entered into an amendment with its landlord and renewed its lease through 2018. In October 2016, the Company entered into an amendment reducing the square footage being leased for the remaining term of the lease. Future minimum lease commitments on operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2016 consisted of only one lease as follows (in thousands): Lease Commitments 2017 $ 64 2018 55 $ 119 Rent expense was $91,000 and $93,000 for each years ended December 31, 2016 and 2015, respectively. Under the employment agreement between the Company and Mr. Broderick effective January 1, 2017, we agreed to pay Mr. Broderick an annual base salary of $175,000 and performance bonuses in cash of up to $275,000 per annum based upon exceeding certain revenue goals and operating metrics, as determined by the Board of Directors, at its discretion. Upon termination of Mr. Broderick’s employment by the Company without cause, we agreed to pay Mr. Broderick a lump sum payment of one year of Mr. Broderick’s then current base salary within 30 days of termination and any unpaid deferred salaries and bonuses. In the event a substantial change in Mr. Broderick’s job duties occurs, there is a decrease in or failure to provide the compensation or vested benefits under the employment agreement or there is a change in control of the Company, we agreed to pay Mr. Broderick a lump sum payment of one year of Mr. Broderick’s then current base salary within thirty (30) days of termination. Additionally, as part of his employment agreement for fiscal 2012, Mr. Broderick will be entitled to receive 1,500,000 shares of the Company’s common stock in the event of the termination, with or without cause, of his employment by the Company or his resignation from the Company with or without cause or in the event of a change of control (as that term is defined in the Employment Agreement) of the Company. Mr. Broderick will have thirty (30) days from the date written notice is given about either a change in his duties or the announcement and closing of a transaction resulting in a change in control of the Company to resign and execute his rights under this agreement. If Mr. Broderick’s employment is terminated for any reason, Mr. Broderick has agreed that, for two (2) years after such termination, he will not directly or indirectly solicit or divert business from us or assist any business in attempting to do so or solicit or hire any person who was our employee during the term of his employment agreement or assist any business in attempting to do so. Under the employment agreement between the Company and Mr. Castagno effective January 1, 2017, we agreed to pay Mr. Castagno an annual base salary of $150,000. Upon termination of Mr. Castagno’s employment by the Company without cause, we agreed to pay Mr. Castagno an amount of $75,000 which is equivalent to six (6) months of Mr. Castagno’s then current base salary in equal semi-monthly installments over the six (6) month period following the termination. If Mr. Castagno’s employment is terminated for any reason, Mr. Castagno has agreed that, for two (2) years after such termination, he will not directly or indirectly solicit or divert business from us or assist any business in attempting to do so or solicit or hire any person who was our employee during the term of his employment agreement or assist any business in attempting to do so. During 2013 the Company amended Mr. Castagno’s employment agreement to provide that Mr. Castagno could engage in consulting services on behalf of the Company and would be compensated for any revenues in excess of his base salary as a bonus. |
12. CONTINGENCIES
12. CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | The Company, from time to time, is involved in legal matters arising in the ordinary course of its business including matters involving proprietary technology. While management believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is or could become involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations. Under the indemnification clause of the Company’s standard reseller agreements and software license agreements, the Company agrees to defend the reseller/licensee against third-party claims asserting infringement by the Company’s products of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and to pay any judgments entered on such claims against the reseller/licensee. There were no claims against the Company as of December 31, 2016 and 2015. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | In first quarter of fiscal 2017, the Company entered into various notes payable totaling $460,000 with Mr. Steffens. The notes bear interest at 10% annually. They are unsecured and mature on June 30, 2017. Subsequent events have been evaluated through March 31, 2017. |
1. SUMMARY OF OPERATIONS, SIG20
1. SUMMARY OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Going Concern and Management Plans | The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred an operating loss of approximately $3,908,000 for the year ended December 31, 2016, and has a history of operating losses. Management believes that its repositioned dual strategy of leading with its Discovery product to use analytics to measure and then manage how work happens, as well as, concentrating on expanding the indirect channel with more resale and OEM partners will shorten the sales cycle and allow for value based selling to our customers and prospects. The Company anticipates success in this regard based upon current discussions with active customers and prospects. Should the Company be unable to secure customer contracts that will drive sufficient cash flow to sustain operations, the Company will be forced to seek additional capital in the form of debt or equity financing; however, there can be no assurance that such debt or equity financing will be available. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All of the Company’s subsidiaries are wholly owned for the periods presented. All significant inter-company accounts and transactions are eliminated in consolidation. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates. Significant estimates include the recoverability of long-lived assets, valuation and recoverability of goodwill, stock based compensation, revenue recognition, deferred taxes and related valuation allowances and valuation of equity instruments. |
Financial Instruments | The carrying amount of the Company’s financial instruments, representing accounts receivable, accounts payable and short-term debt approximate their fair value due to their short-term nature. |
Cash | The Company places substantially all cash with various financial institutions. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially all depository accounts. The Company from time to time may have amounts on deposit in excess of the insured limits. As of December 31, 2016, the Company did not exceed these insured amounts. |
Trade Accounts Receivable | Trade accounts receivable are stated in the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance of doubtful accounts based on its assessment of the current status of individual accounts. Balances still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance of doubtful accounts and a credit to trade accounts receivable. Changes in the allowance for doubtful accounts have not been material to the consolidated financial statements. |
Property and Equipment | Property and equipment purchased in the normal course of business is stated at cost, and property and equipment acquired in business combinations is stated at its fair market value at the acquisition date. All property and equipment is depreciated using the straight-line method over estimated useful lives. Expenditures for repairs and maintenance are charged to expense as incurred. The cost and related accumulated depreciation of property and equipment are removed from the accounts upon retirement or other disposition and any resulting gain or loss is reflected in the Consolidated Statements of Operations. |
Long-Lived Assets | The Company reviews the recoverability of long-lived intangible assets when circumstances indicate that the carrying amount of assets may not be recoverable. This evaluation is based on various analyses including undiscounted cash flow projections. In the event undiscounted cash flow projections indicate impairment, the Company would record an impairment based on the fair value of the assets at the date of the impairment. The Company accounts for impairments under the Financial Accounting Standards Board (“FASB”) guidance now codified as Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment.” |
Accrued Other | Accrued other is primarily comprised of accrued dividends of $447,000 at December 31, 2016 and 2015, respectively, and the remaining balance is comprised of accrued tax, royalty, consulting and other. |
Revenue Recognition | We derive revenue from three sources: license fees, maintenance and support revenue and professional services. Maintenance and support consists of technical support. Professional services primarily consists of consulting, implementation services and training. Significant management judgments and estimates are made and used to determine the revenue recognized in any accounting period. Material differences may result in changes to the amount and timing of our revenue for any period if different conditions were to prevail. We present revenue, net of taxes collected from customers and remitted to governmental authorities. We apply the provisions of ASC 985-605, Software Revenue Recognition, to all transactions involving the licensing of software products. In the event of a multiple element arrangement for a license transaction, we evaluate the transaction as if each element represents a separate unit of accounting taking into account all factors following the accounting standards. When such estimates are not available, the completed contract method is utilized. Under the completed contract method, revenue is recognized only when a contract is completed or substantially complete. When licenses are sold together with system implementation and consulting services, license fees are recognized upon delivery, provided that (i) payment of the license fees is not dependent upon the performance of the consulting and implementation services, (ii) the services are available from other vendors, (iii) the services qualify for separate accounting as we have sufficient experience in providing such services, have the ability to estimate cost of providing such services, and have vendor-specific objective evidence of fair value, and (iv) the services are not essential to the functionality of the software. We use signed software license and services agreements and order forms as evidence of an arrangement for sales of software, maintenance and support. We use signed engagement letters to evidence an arrangement for professional services. License Revenue We recognize license revenue when persuasive evidence of an arrangement exists, the product has been delivered, no significant obligations remain, the fee is fixed or determinable, and collection of the resulting receivable is probable. In software arrangements that include rights to multiple software products and/or services, we use the residual method under which revenue is allocated to the undelivered elements based on vendor-specific objective evidence of the fair value of such undelivered elements. The residual amount of revenue is allocated to the delivered elements and recognized as revenue, assuming all other criteria for revenue recognition have been met. Such undelivered elements in these arrangements typically consist of software maintenance and support, implementation and consulting services. Software is delivered to customers electronically. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction. We have standard payment terms included in our contracts. We assess collectability based on a number of factors, including the customer’s past payment history and its current creditworthiness. If we determine that collection of a fee is not reasonably assured, we defer the revenue and recognize it at the time collection becomes reasonably assured, which is generally upon receipt of cash payment. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period. We consider a software element to exist when we determine that the customer has the contractual right to take possession of our software. Professional services are recognized as described below under “Professional Services Revenue.” If vendor-specific evidence of fair value cannot be established for the undelivered elements of an agreement, the entire amount of revenue from the arrangement is recognized ratably over the period that these elements are delivered. Maintenance Revenue We use vendor-specific objective evidence of fair value for maintenance and support to account for the arrangement using the residual method, regardless of any separate prices stated within the contract for each element. Maintenance and support revenue is recognized ratably over the term of the maintenance contract, which is typically one year. Maintenance and support is renewable by the customer on an annual basis. Maintenance and support rates, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the arrangement. Professional Services Revenue Included in professional services revenue is revenue derived from system implementation, consulting and training. For software transactions, the majority of our consulting and implementation services and accompanying agreements qualify for separate accounting. We use vendor-specific objective evidence of fair value for the services to account for the arrangement using the residual method, regardless of any separate prices stated within the contract for each element. Our consulting and implementation service contracts are bid on a fixed-fee basis. For fixed fee contracts, where the services are not essential to the functionality, we recognize revenue as services are performed. If the services are essential to functionality, then both the product license revenue and the service revenue are deferred until the services are performed. Training revenue that meets the criteria to be accounted for separately is recognized when training is provided. |
Cost of Revenue | The primary component of the Company’s cost of revenue for maintenance and services is compensation expense. |
Advertising Expenses | The Company expenses advertising costs as incurred. Advertising expenses were approximately $117,000 and $217,000 for the years ended December 31, 2016 and 2015, respectively. |
Research and Product Development | Research and product development costs are expensed as incurred unless such costs meet the software capitalization criteria. Research and development expenses were approximately $1,163,000 and $1,445,000 for the years ended December 31, 2016 and 2015, respectively. |
Goodwill impairment charge. | In 2016, we recorded a non-cash goodwill impairment charge of $1,658,000. We test goodwill for impairment annually on December 31 using a discounted cash flow methodology. Our goodwill impairment test as of December 31, 2016, indicated that the carrying value of our SOAdesk acquisition goodwill exceeded its estimated fair value. Accordingly, we recorded a non-cash, non-tax deductible goodwill impairment charge of $1,658,000 in fiscal year 2016, reducing our goodwill from $1,658,000 to zero. No impairment of goodwill was identified as of December 31, 2015. |
Other Income/(Charges) | Other income/(charges) in fiscal 2016 consists primarily of a write off of certain liabilities deemed no longer payable of $87,000. |
Income Taxes | The Company uses FASB guidance now codified as ASC 740 “Income Taxes” to account for income taxes. This statement requires an asset and liability approach that recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, all expected future events, other than enactments of changes in the tax law or rates, are generally considered. A valuation allowance is recorded when it is ‘’more likely than not’’ that recorded deferred tax assets will not be realized. (See Note 6.) |
Loss Per Share | Basic loss per share is computed based upon the weighted average number of common shares outstanding. Diluted loss per share is computed based upon the weighted average number of common shares outstanding and any potentially dilutive securities. During 2016 and 2015, potentially dilutive securities included stock options, warrants to purchase common stock, and preferred stock. The following table sets forth the potential shares that are not included in the diluted net loss per share calculation because to do so would be anti-dilutive for the periods presented: 2016 2015 Stock options 2,832,212 3,657,110 Warrants 207,859,113 207,959,113 Preferred stock -- -- 210,691,325 211,616,223 There was no accrual for dividends on the Series B Preferred Stock in fiscal 2016. $86,000 was accrued for dividends on the Series B Preferred Stock in fiscal year 2015. |
Stock-Based Compensation | The Company accounts for stock-based compensation to employee under ASC 718 “Compensation – Stock Compensation,” which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The Company did not grant any options in fiscal year 2016 and recognized approximately $3,000 of stock-based compensation. The Company granted 525,000 options in fiscal year 2015 at an exercise price of $0.05 per share and recognized approximately $12,000 of stock-based compensation. The fair value of the Company’s stock-based awards to employees was estimated as of the date of the grant using the Black-Scholes option-pricing model, using the following weighted-average assumptions: 2016 2015 Fair value of common stock -- $ 0.05 Expected life (in years) -- 9.99 years Expected volatility -- 160 % Risk free interest rate -- 2.33 % Expected dividend yield -- 0 % |
Recent Accounting Pronouncements | In January 2017, the FASB issued ASU Update No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step of the goodwill impairment test under ASC 350. Under previous guidance, if the fair value of a reporting unit is lower than its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate the fair value of any unrecognized intangible assets (including in-process research and development) and any corporate-level assets or liabilities that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under this new guidance if a reporting unit’s carrying value exceeds its fair value, an entity will record an impairment charge based on that difference with such impairment charge limited to the amount of goodwill in the reporting unit. This ASU does not change the guidance on completing Step 1 of the goodwill impairment test. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. This ASU will be applied prospectively and is effective for annual and interim impairment test performed in periods beginning after December 15, 2019 for public business enterprises. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In August 2016, the FASB issued a new accounting standard that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists. The new standard is effective for us in our first quarter of fiscal 2018 and earlier adoption is permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued a new accounting standard intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance includes provisions to reduce the complexity related to income taxes, statement of cash flows, and forfeitures when accounting for share-based payment transactions. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within annual periods ending after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements and related disclosures. The FASB's new leases standard ASU 2016-02 Leases (Topic 842) was issued on February 25, 2016. ASU 2016-02 is intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets referred to as “Lessees” to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. An organization is to provide disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements concerning additional information about the amounts recorded in the financial statements. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP which requires only capital leases to be recognized on the balance sheet the new ASU will require both types of leases (i.e. operating and capital) to be recognized on the balance sheet. The FASB lessee accounting model will continue to account for both types of leases. The capital lease will be accounted for in substantially the same manner as capital leases are accounted for under existing GAAP. The operating lease will be accounted for in a manner similar to operating leases under existing GAAP, except that lessees will recognize a lease liability and a lease asset for all of those leases. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption will be permitted for all companies and organizations upon issuance of the standard. For calendar year-end public companies, this means an adoption date of January 1, 2019 and retrospective application to previously issued annual and interim financial statements for 2018. See Note 7 for the Company’s current lease commitments. The Company is currently in the process of evaluating the impact that this new leasing ASU will have on its financial statements. In January 2016, the FASB issued a new accounting standard that will enhance the Company’s reporting through the updating of the recognition, measurement, presentation, and disclosure of financial instruments. The new standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within that annual periods. Earlier adoption for public companies is permitted for interim and annual reporting periods as of the beginning of the fiscal year of adoption. The Company does not believe the adoption of this standard will have a material impact on its consolidated financial statements. In August 2014, the FASB issued a new accounting standard that will require management to assess and evaluate whether conditions or events exist, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements issue date. It is effective for annual periods ending after December 15, 2016 and for annual and interim periods thereafter. early adoption is permitted. The adoption of this standard did not have a material impact on our consolidated financial statements. In May 2014, the FASB issued a new accounting standard update on revenue recognition from contracts with customers. The new guidance will replace most current U.S. GAAP guidance on this topic and eliminate most industry-specific guidance. According to the new guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet selected a transition method and is evaluating the impact of adopting this new accounting standard update on the consolidated financial statements and related disclosures. We expect to identify similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified. As a result, we expect timing of our revenue to be very similar to how we record revenue currently. |
1. SUMMARY OF OPERATIONS, SIG21
1. SUMMARY OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary Of Operations Significant Accounting Policies And Recent Accounting Pronouncements Tables | |
Diluted net loss per share | 2016 2015 Stock options 2,832,212 3,657,110 Warrants 207,859,113 207,959,113 Preferred stock -- -- 210,691,325 211,616,223 |
Stock-Based Compensation | 2016 2015 Fair value of common stock -- $ 0.05 Expected life (in years) -- 9.99 years Expected volatility -- 160 % Risk free interest rate -- 2.33 % Expected dividend yield -- 0 % |
2. ACCOUNTS RECEIVABLE (Tables)
2. ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable Tables | |
Trade accounts receivable | 2016 2015 Current trade accounts receivable $ 278 $ 256 |
3. PROPERTY AND EQUIPMENT (Tabl
3. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property And Equipment Tables | |
Property and equipment | 2016 2015 Computer equipment $ 138 $ 160 Furniture and fixtures 19 24 Office equipment 35 35 193 219 Less: accumulated depreciation (184 ) (208 ) $ 9 $ 11 |
4. INTANGIBLE ASSET, NET AND 24
4. INTANGIBLE ASSET, NET AND GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Asset Net And Goodwill Tables | |
Schedule of goodwill adjustments | Goodwill Balance at December 31, 2014 $ 1,658,000 Additions -- Impairment -- Balance at December 31, 2015 1,658,000 Additions -- Impairment 1,658,000 Balance at December 31, 2016 $ -- |
5. DEBT (Tables)
5. DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt and notes payable to related party | December 31, 2015 December 31, 2015 Note payable – asset purchase agreement (a) $ 1,518 $ 1,518 Note payable – related parties (b) 2,879 1,845 Notes payable (c) 1,086 1,086 Unamortized debt discount (b) -- (219 ) Total debt 5,483 4,230 Less current portion -- (2,098 ) Total long term debt $ -- $ 2,132 |
6. INCOME TAXES (Tables)
6. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes Tables | |
Reconciliation of expected income tax at the statutory federal rate with the actual income tax provision | 2016 2015 Expected income tax benefit at statutory rate (34%) $ (1,329 ) $ (967 ) State taxes, net of federal tax benefit (160 ) (170 ) Effect of change in valuation allowance (1,249 ) (5,860 ) Non-deductible expenses 1 3 Change in state tax rate 2,737 Expiration of net operating loss deductions — 6,994 Total $ — $ — |
Net deferred tax asset (liability) | 2016 2015 Accrued expenses, non-tax deductible $ 15 $ 7 Deferred revenue 281 242 Contingent payments (788 ) (831 ) Stock compensation expense 593 621 Loss carryforwards 54,802 56,583 Depreciation and amortization 1,436 966 56,339 57,588 Less: valuation allowance (56,339 ) (57,588 ) $ — $ — |
7. STOCKHOLDER'S EQUITY (Tables
7. STOCKHOLDER'S EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders Equity Tables | |
Activity for stock options issued | Number of Options Option Price Per Share Weighted Average Exercise Price Aggregate Intrinsic Value Balance at December 31, 2014 3,150,110 0.02-0.51 $ 0.24 Granted 525,000 0.05 $ 0.05 Forfeited (10,000 ) 0.09 $ 0.09 Expired (8,000 ) 0.51 $ 0.51 Balance at December 31, 2015 3,657,110 0.03-0.51 $ 0.21 Granted -- -- -- Forfeited (770,898 ) 0.02-0.51 $ 0.11 Expired (54,000 ) 0.02-0.51 0.11 Balance at December 31, 2016 2,832,212 0.05-0.51 $ 0.24 $ 0.00 |
Activity for non-vested stock options | Number of Options Option Price Per Share Weighted Average Exercise Price Balance at December 31, 2014 18,333 0.02-0.05 $ 0.04 Granted 525,000 0.05 $ 0.05 Vested (188,332 ) 0.05 $ 0.05 Forfeited -- --- -- Balance at December 31, 2015 355,001 0.05 $ 0.05 Granted -- -- -- Vested (104,702 ) 0.05 $ 0.05 Forfeited (145,599 ) 0.05 $ 0.05 Balance at December 31, 2016 104,700 0.05 $ 0.05 |
Stock options outstanding | Exercise Price Number Outstanding Remaining Contractual Life for Options Outstanding Number Exercisable Weighted Average Exercise Price $ 0.05-0.06 479,102 7.3 374,402 $ 0.05 0.07-0.08 500,000 4.6 500,000 0.07 0.09-0.37 787,750 3.4 787,750 0.10 0.38-0.51 1,065,360 0.7 1,065,360 0.51 2,832,212 3.2 2,727,512 $ 0.25 |
Stock warrant activity | Number of Warrants Warrant Price Per Share Weighted Average Exercise Price Balance at December 31, 2014 5,281,333 $ 0.08-$0.25 $ 0.22 Issued 205,277,780 $ 0.04-$0.05 $ 0.05 Exercised -- -- -- Forfeited (2,600,000 ) $ 0.25 $ 0.25 Balance at December 31, 2015 207,959,113 $ 0.04-$0.20 $ 0.05 Issued -- -- -- Exercised -- -- -- Forfeited (100,000 ) $ 0.08 $ 0.08 Balance at December 31, 2016 207,859,113 $ 0.04-$0.20 $ 0.05 |
11. COMMITMENTS AND EMPLOYMEN28
11. COMMITMENTS AND EMPLOYMENT AGREEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Employment Agreements Tables | |
Future minimum lease commitments on operating leases | Lease Commitments 2017 $ 64 2018 55 $ 119 |
1. SUMMARY OF OPERATIONS, SIG29
1. SUMMARY OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Total | 210,691,325 | 211,616,223 |
Stock Options [Member] | ||
Total | 2,832,212 | 3,657,110 |
Warrant [Member] | ||
Total | 207,859,113 | 207,959,113 |
Preferred Stock | ||
Total | 0 | 0 |
1. SUMMARY OF OPERATIONS, SIG30
1. SUMMARY OF OPERATIONS, SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | ||
Fair value of common stock | $ 0 | $ 0.05 |
Expected life (in years) | 0 years | 9 years 11 months 26 days |
Expected volatility | 0.00% | 160.00% |
Risk free interest rate | 0.00% | 2.33% |
Expected dividend yield | 0.00% | 0.00% |
2. ACCOUNTS RECEIVABLE (Details
2. ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Current trade accounts receivable | $ 278 | $ 256 |
3. PROPERTY AND EQUIPMENT (Deta
3. PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Computer equipment | $ 138 | $ 160 |
Furniture and fixtures | 19 | 24 |
Office equipment | 35 | 35 |
Property and equipment, gross | 193 | 219 |
Less: accumulated depreciation and amortization | (184) | (208) |
Property and equipment, net | $ 9 | $ 11 |
3. PROPERTY AND EQUIPMENT (De33
3. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Depreciation and amortization | $ 5 | $ 13 |
4. INTANGIBLE ASSET, NET AND 34
4. INTANGIBLE ASSET, NET AND GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Asset Net And Goodwill Details | ||
Beginning Balance | $ 1,658 | $ 1,658 |
Impairment | 1,658 | 0 |
Ending Balance | $ 0 | $ 1,658 |
5. DEBT (Details)
5. DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Details | ||
Note payable asset purchase agreement (a) | $ 1,518 | $ 1,518 |
Note payable - related party (b) | 2,879 | 1,845 |
Note payable (c) | 1,086 | 1,086 |
Unamortized debt discount (b) | 0 | (219) |
Total debt | 5,483 | 4,230 |
Less current portion | 0 | (2,098) |
Total long term debt | $ 0 | $ 2,132 |
6. INCOME TAXES (Details)
6. INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Expected income tax benefit at statutory rate (34%) | $ (1,329) | $ (967) |
State taxes, net of federal tax benefit. | (160) | (170) |
Effect of change in valuation allowance | (1,249) | (5,860) |
Non-deductible expenses | 1 | 3 |
Change in state tax rate | 2,737 | 0 |
Expiration of net operating loss deductions | 0 | 6,994 |
Total | $ 0 | $ 0 |
6. INCOME TAXES (Details 1)
6. INCOME TAXES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Accrued expenses, non-tax deductible | $ 15 | $ 7 |
Deferred revenue | 281 | 242 |
Contingent payments | (788) | (831) |
Noncurrent assets: | ||
Stock compensation expense | 593 | 621 |
Loss carryforwards | 54,802 | 56,583 |
Depreciation and amortization | 1,436 | 966 |
Gross Deferred Tax | 56,339 | 57,588 |
Less: valuation allowance | (56,339) | (57,588) |
Net Deferred tax Assets | $ 0 | $ 0 |
6. INCOME TAXES (Details Narrat
6. INCOME TAXES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforwards | $ 143,842 |
Net operating loss carryforwards expiration years | 2020 and 2036 |
Tax benefit reflected in additional paid-in capital | $ 21,177 |
7. STOCKHOLDER'S EQUITY (Detail
7. STOCKHOLDER'S EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Options | ||
Beginning Balance | 3,657,110 | 3,150,110 |
Granted | 0 | 525,000 |
Forfeited | (770,898) | (10,000) |
Expired | (54,000) | (8,000) |
Ending Balance | 2,832,212 | 3,657,110 |
Option Price Per Share | ||
Granted | $ 0 | $ 0.05 |
Forfeited | 0.09 | |
Expired | 0.51 | |
Weighted Average Exercise Price | ||
Beginning Balance | 0.21 | 0.24 |
Granted | 0 | 0.05 |
Forfeited | 0.11 | 0.09 |
Expired | .11 | 0.51 |
Ending Balance | $ 0.24 | $ 0.21 |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ 0 | $ 0 |
Minimum [Member] | ||
Option Price Per Share | ||
Beginning Balance | $ 0.03 | $ 0.02 |
Forfeited | 0.02 | |
Expired | .02 | |
Ending Balance | 0.05 | 0.03 |
Maximum [Member] | ||
Option Price Per Share | ||
Beginning Balance | 0.51 | 0.51 |
Forfeited | 0.51 | |
Expired | .51 | |
Ending Balance | $ 0.51 | $ 0.51 |
7. STOCKHOLDER'S EQUITY (Deta40
7. STOCKHOLDER'S EQUITY (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Unvested Number of Options | ||
Beginning Balance | 355,001 | 18,333 |
Granted | 0 | 525,000 |
Vested | (104,702) | (188,332) |
Forfeited | (145,599) | 0 |
Ending Balance | 104,700 | 355,001 |
Unvested Option Price Per Share | ||
Beginning Balance | $ 0.05 | |
Granted | 0 | $ 0.05 |
Vested | 0.05 | 0.05 |
Forfeited | .05 | 0 |
Ending Balance | 0.05 | 0.05 |
Weighted Average Exercise Price | ||
Beginning Balance | 0.05 | 0.04 |
Granted | 0 | 0.05 |
Vested | 0.05 | 0.05 |
Forfeited | 0.05 | 0 |
Ending Balance | $ 0.05 | 0.05 |
Minimum [Member] | ||
Unvested Option Price Per Share | ||
Beginning Balance | 0.02 | |
Maximum [Member] | ||
Unvested Option Price Per Share | ||
Beginning Balance | $ 0.05 |
7. STOCKHOLDER'S EQUITY (Deta41
7. STOCKHOLDER'S EQUITY (Details 2) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
NUMBER OUTSTANDING | 2,832,212 | 3,657,110 | 3,150,110 |
Remaining Contractual Life for Options Outstanding | 3 years 2 months 12 days | ||
NUMBER EXERCISABLE | 2,727,512 | ||
WEIGHTED AVERAGE EXERCISE PRICE | $ 0.25 | ||
Exercise Price 0.05-0.06 [Member] | |||
NUMBER OUTSTANDING | 479,102 | ||
Remaining Contractual Life for Options Outstanding | 7 years 3 months 18 days | ||
NUMBER EXERCISABLE | 374,402 | ||
WEIGHTED AVERAGE EXERCISE PRICE | $ 0.05 | ||
Exercise Price 0.07 to 0.08 [Member] | |||
NUMBER OUTSTANDING | 500,000 | ||
Remaining Contractual Life for Options Outstanding | 4 years 7 months 6 days | ||
NUMBER EXERCISABLE | 500,000 | ||
WEIGHTED AVERAGE EXERCISE PRICE | $ 0.07 | ||
Exercise Price 0.09-0.37 [Member] | |||
NUMBER OUTSTANDING | 787,750 | ||
Remaining Contractual Life for Options Outstanding | 3 years 4 months 24 days | ||
NUMBER EXERCISABLE | 787,750 | ||
WEIGHTED AVERAGE EXERCISE PRICE | $ 0.1 | ||
Exercise Price 0.38-0.51 [Member] | |||
NUMBER OUTSTANDING | 1,065,360 | ||
Remaining Contractual Life for Options Outstanding | 8 months 12 days | ||
NUMBER EXERCISABLE | 1,065,360 | ||
WEIGHTED AVERAGE EXERCISE PRICE | $ 0.51 |
7. STOCKHOLDER'S EQUITY (Deta42
7. STOCKHOLDER'S EQUITY (Details 3) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants Beginning | 207,959,113 | 5,281,333 |
Issued | 0 | 205,277,780 |
Exercised | 0 | 0 |
Forfeited | (100,000) | (2,600,000) |
Ending Balance | 207,859,113 | 207,959,113 |
Warrants Price Per Share | ||
Issued | 0 | |
Exercised | 0 | 0 |
Forfeited | 0.08 | 0.25 |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.05 | $ 0.22 |
Issued | 0 | 0.05 |
Exercised | $ 0 | $ 0 |
Forfeited | 0.08 | 0.25 |
Ending Balance | $ 0.05 | $ 0.05 |
Minimum [Member] | ||
Warrants Price Per Share | ||
Beginning Balance | 0.04 | 0.08 |
Issued | 0.04 | |
Ending Balance | 0.04 | 0.04 |
Maximum [Member] | ||
Warrants Price Per Share | ||
Beginning Balance | 0.20 | 0.25 |
Issued | 0.05 | |
Ending Balance | 0.20 | 0.20 |
11. COMMITMENTS AND EMPLOYMEN43
11. COMMITMENTS AND EMPLOYMENT AGREEMENTS (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 64 |
2,018 | 55 |
Total | $ 119 |