2017 Q1 Form 10-K Financial Statement

#000074621017000004 Filed on March 31, 2017

View on sec.gov

Income Statement

Concept 2017 Q1 2016 2015 Q4
Revenue $4.080M $19.22M $5.690M
YoY Change -26.06% -24.76% -26.58%
Cost Of Revenue $2.450M $11.68M $3.470M
YoY Change -29.19% -21.29% -17.97%
Gross Profit $1.630M $7.540M $2.220M
YoY Change -20.87% -29.53% -36.93%
Gross Profit Margin 39.95% 39.23% 39.02%
Selling, General & Admin $1.156M $5.870M $1.640M
YoY Change -23.95% -21.35% -6.82%
% of Gross Profit 70.92% 77.85% 73.87%
Research & Development $287.0K $1.120M $380.0K
YoY Change 0.0% -17.04% 31.03%
% of Gross Profit 17.61% 14.85% 17.12%
Depreciation & Amortization $459.0K $1.959M $590.0K
YoY Change -16.09% -12.35% -22.37%
% of Gross Profit 28.16% 25.98% 26.58%
Operating Expenses $1.443M $5.870M $2.600M
YoY Change -20.14% -21.35% -7.14%
Operating Profit -$270.0K -$2.085M -$380.0K
YoY Change -8.47% 326.38% -152.78%
Interest Expense -$370.0K $1.455M -$380.0K
YoY Change -2.63% 4.15% 5.56%
% of Operating Profit
Other Income/Expense, Net -$371.0K -$1.527M
YoY Change -2.37% 2.9%
Pretax Income -$641.0K -$3.610M -$760.0K
YoY Change -5.04% 83.25% -61.62%
Income Tax $27.00K -$79.00K $170.0K
% Of Pretax Income
Net Earnings -$668.0K -$3.533M -$930.0K
YoY Change -6.18% 64.86% -56.13%
Net Earnings / Revenue -16.37% -18.38% -16.34%
Basic Earnings Per Share -$0.10
Diluted Earnings Per Share -$185.1K -$0.10 -$262.7K
COMMON SHARES
Basic Shares Outstanding 36.53M shares 35.61M shares 35.71M shares
Diluted Shares Outstanding 35.61M shares

Balance Sheet

Concept 2017 Q1 2016 2015 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.100M $1.100M $1.800M
YoY Change -45.0% -38.89% -5.26%
Cash & Equivalents
Short-Term Investments
Other Short-Term Assets $1.000M $1.000M $600.0K
YoY Change 100.0% 66.67% -33.33%
Inventory
Prepaid Expenses
Receivables $1.642M $1.600M $2.698M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $3.788M $3.800M $5.015M
YoY Change -28.42% -24.0% -19.58%
LONG-TERM ASSETS
Property, Plant & Equipment $1.997M $2.200M $2.986M
YoY Change -26.98% -26.67% -8.01%
Goodwill $9.225M $9.825M
YoY Change -6.11% 0.0%
Intangibles $1.092M $2.178M
YoY Change -44.31% -28.52%
Long-Term Investments
YoY Change
Other Assets $10.00K $0.00 $30.00K
YoY Change -23.08% -88.55%
Total Long-Term Assets $12.32M $12.70M $15.02M
YoY Change -15.21% -15.33% -8.31%
TOTAL ASSETS
Total Short-Term Assets $3.788M $3.800M $5.015M
Total Long-Term Assets $12.32M $12.70M $15.02M
Total Assets $16.11M $16.50M $20.03M
YoY Change -18.73% -17.5% -11.42%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $156.0K $100.0K $385.0K
YoY Change -63.12% -75.0% -68.44%
Accrued Expenses $1.222M $1.600M $1.492M
YoY Change -13.58% -20.0% -5.33%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $400.0K
YoY Change -100.0% 0.0%
Long-Term Debt Due $10.68M $10.70M $400.0K
YoY Change 2569.5% 2575.0% 0.0%
Total Short-Term Liabilities $12.45M $12.30M $2.754M
YoY Change 325.5% 339.29% -25.99%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00 $10.59M
YoY Change -100.0% -100.0% -1.83%
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities $0.00 $0.00 $10.90M
YoY Change -100.0% -100.0% -0.28%
TOTAL LIABILITIES
Total Short-Term Liabilities $12.45M $12.30M $2.754M
Total Long-Term Liabilities $0.00 $0.00 $10.90M
Total Liabilities $12.70M $12.60M $13.65M
YoY Change -8.46% -8.03% -6.81%
SHAREHOLDERS EQUITY
Retained Earnings -$177.0M -$172.8M
YoY Change 2.01% 1.26%
Common Stock $180.5M $179.2M
YoY Change 0.54% 0.43%
Preferred Stock
YoY Change
Treasury Stock (at cost) $231.0K $206.0K
YoY Change 5.48% 212.12%
Treasury Stock Shares 247.0K shares 179.0K shares
Shareholders Equity $3.409M $3.900M $6.383M
YoY Change
Total Liabilities & Shareholders Equity $16.11M $16.50M $20.03M
YoY Change -18.73% -17.5% -11.42%

Cashflow Statement

Concept 2017 Q1 2016 2015 Q4
OPERATING ACTIVITIES
Net Income -$668.0K -$3.533M -$930.0K
YoY Change -6.18% 64.86% -56.13%
Depreciation, Depletion And Amortization $459.0K $1.959M $590.0K
YoY Change -16.09% -12.35% -22.37%
Cash From Operating Activities $18.00K $183.0K -$140.0K
YoY Change -95.0% -85.21% -160.87%
INVESTING ACTIVITIES
Capital Expenditures $36.00K $382.0K -$190.0K
YoY Change -53.85% -69.37% -67.8%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00
YoY Change
Cash From Investing Activities -$36.00K -$382.0K -$190.0K
YoY Change -53.85% -69.29% -67.24%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $12.00K -$191.0K
YoY Change -7.69% -236.43%
Debt Paid & Issued, Net $0.00 $400.0K
YoY Change -34.75%
Cash From Financing Activities -$12.00K -$425.0K 370.0K
YoY Change -7.69% 154.49% 164.29%
NET CHANGE
Cash From Operating Activities $18.00K $183.0K -140.0K
Cash From Investing Activities -$36.00K -$382.0K -190.0K
Cash From Financing Activities -$12.00K -$425.0K 370.0K
Net Change In Cash -$30.00K -$624.0K 40.00K
YoY Change -67.03% 258.62% -119.05%
FREE CASH FLOW
Cash From Operating Activities $18.00K $183.0K -$140.0K
Capital Expenditures $36.00K $382.0K -$190.0K
Free Cash Flow -$18.00K -$199.0K $50.00K
YoY Change -106.38% 1890.0% -93.9%

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0 USD
CY2016 us-gaap Employee Service Share Based Compensation Allocation Of Recognized Period Costs Capitalized Amount
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CY2016 us-gaap Employee Service Share Based Compensation Tax Benefit From Compensation Expense
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3699000 USD
CY2016Q4 us-gaap Finite Lived Intangible Assets Accumulated Amortization
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4568000 USD
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683000 USD
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69000 USD
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113000 USD
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127000 USD
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127000 USD
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5877000 USD
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5877000 USD
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2178000 USD
CY2016Q4 us-gaap Finite Lived Intangible Assets Net
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1309000 USD
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0 USD
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600000 USD
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170000 USD
CY2016 us-gaap Income Tax Expense Benefit
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-79000 USD
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1347000 USD
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-692000 USD
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12000 USD
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8000 USD
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-53000 USD
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-170000 USD
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79000 USD
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-15000 USD
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0 USD
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2178000 USD
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-1000 USD
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1309000 USD
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CY2016 us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
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425000 USD
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12572000 USD
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20034000 USD
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16500000 USD
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2754000 USD
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12342000 USD
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10897000 USD
CY2016Q4 us-gaap Liabilities Noncurrent
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230000 USD
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400000 USD
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10660000 USD
CY2015Q4 us-gaap Long Term Debt Noncurrent
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10588000 USD
CY2016Q4 us-gaap Long Term Debt Noncurrent
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0 USD
CY2015Q4 us-gaap Long Term Loans Payable
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10588000 USD
CY2016Q4 us-gaap Long Term Loans Payable
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0 USD
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-382000 USD
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1237000 USD
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183000 USD
CY2015 us-gaap Net Income Loss
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-2143000 USD
CY2016 us-gaap Net Income Loss
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-3533000 USD
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-2161000 USD
CY2016 us-gaap Net Income Loss Available To Common Stockholders Basic
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-3545000 USD
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-1484000 USD
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-1527000 USD
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1 segment
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-489000 USD
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-2085000 USD
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720000 USD
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301000 USD
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23000 USD
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88000 USD
CY2016Q4 us-gaap Operating Leases Future Minimum Payments Due In Two Years
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308000 USD
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342000 USD
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287000 USD
CY2015Q4 us-gaap Operating Loss Carryforwards
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27417000 USD
CY2016Q4 us-gaap Operating Loss Carryforwards
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30558000 USD
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222000 USD
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13000 USD
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2000 USD
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6000 USD
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30000 USD
CY2016Q4 us-gaap Other Assets Noncurrent
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10000 USD
CY2015Q4 us-gaap Other Prepaid Expense Current
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159000 USD
CY2016Q4 us-gaap Other Prepaid Expense Current
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125000 USD
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140000 USD
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12000 USD
CY2015 us-gaap Payments To Acquire Property Plant And Equipment
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1247000 USD
CY2016 us-gaap Payments To Acquire Property Plant And Equipment
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382000 USD
CY2015 us-gaap Preferred Stock Dividends Income Statement Impact
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18000 USD
CY2016 us-gaap Preferred Stock Dividends Income Statement Impact
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12000 USD
CY2015Q4 us-gaap Preferred Stock Liquidation Preference Value
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237000 USD
CY2016Q4 us-gaap Preferred Stock Liquidation Preference Value
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237000 USD
CY2015Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
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0.0001
CY2016Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.0001
CY2015Q4 us-gaap Preferred Stock Shares Authorized
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7500 shares
CY2016Q4 us-gaap Preferred Stock Shares Authorized
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7500 shares
CY2015Q4 us-gaap Preferred Stock Shares Issued
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32 shares
CY2016Q4 us-gaap Preferred Stock Shares Issued
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32 shares
CY2015Q4 us-gaap Preferred Stock Shares Outstanding
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32 shares
CY2016Q4 us-gaap Preferred Stock Shares Outstanding
PreferredStockSharesOutstanding
32 shares
CY2015Q4 us-gaap Prepaid Expense And Other Assets Current
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553000 USD
CY2016Q4 us-gaap Prepaid Expense And Other Assets Current
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978000 USD
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145000 USD
CY2016Q4 us-gaap Prepaid Insurance
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321000 USD
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0 USD
CY2016Q4 us-gaap Prepaid Taxes
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72000 USD
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0 USD
CY2016 us-gaap Proceeds From Issuance Of Common Stock
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204000 USD
CY2015 us-gaap Proceeds From Issuance Of Long Term Debt
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613000 USD
CY2016 us-gaap Proceeds From Issuance Of Long Term Debt
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0 USD
CY2015 us-gaap Proceeds From Repurchase Of Equity
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18000 USD
CY2016 us-gaap Proceeds From Repurchase Of Equity
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0 USD
CY2015 us-gaap Proceeds From Sale Of Machinery And Equipment
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3000 USD
CY2016 us-gaap Proceeds From Sale Of Machinery And Equipment
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0 USD
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14353000 USD
CY2016Q4 us-gaap Property Plant And Equipment Gross
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14003000 USD
CY2015Q4 us-gaap Property Plant And Equipment Net
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2986000 USD
CY2016Q4 us-gaap Property Plant And Equipment Net
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2203000 USD
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43000 USD
CY2016 us-gaap Repayments Of Debt And Capital Lease Obligations
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0 USD
CY2015 us-gaap Repayments Of Long Term Debt
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613000 USD
CY2016 us-gaap Repayments Of Long Term Debt
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400000 USD
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242000 USD
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18000 USD
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25541000 USD
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19218000 USD
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2047000 USD
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0 shares
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664000 USD
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813000 USD
CY2016 us-gaap Share Based Compensation
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929000 USD
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0 USD
CY2016 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Exercises In Period Total Intrinsic Value
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0 USD
CY2016 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Gross
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0 shares
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0 USD
CY2016Q4 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Exercisable Intrinsic Value1
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0 USD
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0 shares
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0 shares
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22000 USD
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93000 USD
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7967000 USD
CY2015Q4 us-gaap Stockholders Equity
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6383000 USD
CY2016Q4 us-gaap Stockholders Equity
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3928000 USD
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138000 USD
CY2016 us-gaap Tangible Asset Impairment Charges
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76000 USD
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179000 shares
CY2016Q4 us-gaap Treasury Stock Shares
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204000 shares
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206000 USD
CY2016Q4 us-gaap Treasury Stock Value
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219000 USD
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140000 USD
CY2016 us-gaap Treasury Stock Value Acquired Cost Method
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13000 USD
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197000 USD
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125000 USD
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0 USD
CY2016Q4 us-gaap Unrecognized Tax Benefits
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0 USD
CY2015Q4 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
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0 USD
CY2016Q4 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
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0 USD
CY2015 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Expense
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0 USD
CY2016 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Expense
UnrecognizedTaxBenefitsIncomeTaxPenaltiesAndInterestExpense
0 USD
CY2016 us-gaap Valuation Allowance Deferred Tax Asset Change In Amount
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35442000 shares
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35611000 shares
CY2016 us-gaap Concentration Risk Credit Risk
ConcentrationRiskCreditRisk
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Concentration of Credit Risk</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, and trade accounts receivable. We place our cash primarily in commercial checking accounts. Commercial bank balances may from time to time exceed federal insurance limits.</font></div></div>
CY2016 us-gaap Nature Of Operations
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Business Description and Significant Accounting Policies</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Business Description</font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font></div><div style="line-height:120%;text-align:justify;text-indent:21px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Glowpoint, Inc. (&#8220;Glowpoint&#8221; or &#8220;we&#8221; or &#8220;us&#8221; or the &#8220;Company&#8221;) is a managed service provider of video collaboration and network applications. Our services are designed to provide a comprehensive suite of automated and concierge applications to simplify the user experience and expedite the adoption of video as the primary means of collaboration. Our customers include Fortune 1000 companies, along with small and medium enterprises in a variety of industries. We market our services globally through a multi-channel sales approach that includes direct sales and channel partners. The Company was formed as a Delaware corporation in May 2000. The Company operates in </font><font style="font-family:inherit;font-size:10pt;">one</font><font style="font-family:inherit;font-size:10pt;"> segment and therefore segment information is not presented.</font></div><div style="line-height:120%;text-align:justify;text-indent:21px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Principles of Consolidation</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The consolidated financial statements include the accounts of Glowpoint and our </font><font style="font-family:inherit;font-size:10pt;">100%</font><font style="font-family:inherit;font-size:10pt;">-owned subsidiary, GP Communications, LLC, whose business function is to provide interstate telecommunications services for regulatory purposes. All material inter-company balances and transactions have been eliminated in consolidation.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;&#160;</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Reclassification</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Certain prior year amounts have been reclassified to conform with the current year presentation. </font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (&#8220;U.S. GAAP&#8221;) 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 the estimates made. We continually evaluate estimates used in the preparation of our consolidated financial statements for reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include determining the allowance for doubtful accounts, deferred tax valuation allowance, accrued sales taxes and regulatory fees, stock-based compensation, the valuation of goodwill, the valuation of intangible assets and their estimated lives, and the estimated lives and recoverability of property and equipment. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Allowance for Doubtful Accounts</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We perform ongoing credit evaluations of our customers. We record an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. We also record additional allowances based on our aged receivables, which are determined based on historical experience and an assessment of the general financial conditions affecting our customer base. If our actual collections experience changes, revisions to our allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We do not obtain collateral from our customers to secure accounts receivable. The allowance for doubtful accounts was </font><font style="font-family:inherit;font-size:10pt;">$32,000</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$45,000</font><font style="font-family:inherit;font-size:10pt;"> at </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2016</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">2015</font><font style="font-family:inherit;font-size:10pt;">, respectively. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Fair Value of Financial Instruments</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company considers its cash, accounts receivable and accounts payable to meet the definition of financial instruments. The carrying amount of cash, accounts receivable and accounts payable approximated their fair value due to the short maturities of these instruments. The carrying amounts of our debt obligations (see Note 7) approximate their fair values, which are based on borrowing rates that are available to the Company for loans with similar terms, collateral, and maturity. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company measures fair value as required by the ASC Topic 820</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8220;Fair Value Measurements and Disclosures&#8221;</font><font style="font-family:inherit;font-size:10pt;"> (&#8220;ASC Topic 820&#8221;).&#160;&#160;ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:61px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:37px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. </font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:8px;padding-bottom:8px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:61px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:37px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Level 2 - inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. </font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:61px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:37px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Level 3 - unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. </font></div></td></tr></table><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.&#160;&#160;The Company did not have any unobservable inputs as of </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2016</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">2015</font><font style="font-family:inherit;font-size:10pt;"> or during the years then ended. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Revenue Recognition</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Revenue billed in advance for video collaboration services is deferred until the revenue has been earned, which is when the related services have been performed. Other service revenue, including amounts passed through based on surcharges from our telecom carriers, related to the network services and collaboration services are recognized as service is provided. As the non-refundable, upfront installation and activation fees charged to our customers do not meet the criteria as a separate unit of accounting, they are deferred and recognized over the </font><font style="font-family:inherit;font-size:10pt;">12</font><font style="font-family:inherit;font-size:10pt;"> to </font><font style="font-family:inherit;font-size:10pt;">24</font><font style="font-family:inherit;font-size:10pt;"> month period estimated life of the customer relationship. Revenue related to professional services is recognized at the time the services are performed, and presented as required by ASC Topic 605 &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue Recognition&#8221;.&#160;</font><font style="font-family:inherit;font-size:10pt;">Revenues derived from other sources are recognized when services are provided or events occur.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Taxes Billed to Customers and Remitted to Taxing Authorities</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. For the years ended </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2016</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">2015</font><font style="font-family:inherit;font-size:10pt;">, we included taxes of </font><font style="font-family:inherit;font-size:10pt;">$830,000</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$1,070,000</font><font style="font-family:inherit;font-size:10pt;">, respectively, in revenue and we included taxes of </font><font style="font-family:inherit;font-size:10pt;">$1,070,000</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$1,032,000</font><font style="font-family:inherit;font-size:10pt;">, respectively, in cost of revenue. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Impairment of Long-Lived Assets and Intangible Assets</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company assesses the impairment of long-lived assets used in operations, primarily fixed assets and purchased intangible assets subject to amortization when events and circumstances indicate that the carrying value of the assets might not be recoverable. For purposes of evaluating the recoverability of fixed assets, the undiscounted cash flows estimated to be generated by those assets are compared to the carrying amounts of those assets. If and when the carrying values of the assets exceed their fair values, then the related assets will be written down to fair value. Fair value of our intangible assets is determined using the relief from royalty methodology. This approach involves two steps: (a) estimating reasonable royalty rates for each intangible asset and (b) applying these royalty rates to a net revenue stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of each intangible asset. If the carrying amount of the intangible asset is greater than its implied fair value, an impairment in the amount of the excess is recognized and charged to operations. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in the Company&#8217;s strategic plan and/or other-than-temporary changes in market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. Long-lived assets are evaluated for impairment at least annually, as well as whenever an event or change in circumstances has occurred that could have a significant adverse effect on the fair value of long-lived assets (see Note 6).</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Capitalized Software Costs </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company capitalizes certain costs incurred in connection with developing or obtaining internal-use software. All software development costs have been appropriately accounted for as required by ASC Topic 350-40 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8220;Intangible &#8211; Goodwill and Other &#8211; Internal-Use Software&#8221;. </font><font style="font-family:inherit;font-size:10pt;">Capitalized software costs are included in &#8220;Property and equipment&#8221; on our consolidated balance sheets and are amortized over </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> to </font><font style="font-family:inherit;font-size:10pt;">four</font><font style="font-family:inherit;font-size:10pt;"> years. Software costs that do not meet capitalization criteria are expensed as incurred. For the year ended </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2016</font><font style="font-family:inherit;font-size:10pt;">, we capitalized internal-use software costs of </font><font style="font-family:inherit;font-size:10pt;">$339,000</font><font style="font-family:inherit;font-size:10pt;"> and we amortized </font><font style="font-family:inherit;font-size:10pt;">$652,000</font><font style="font-family:inherit;font-size:10pt;"> of these costs. For the year ended December 31, </font><font style="font-family:inherit;font-size:10pt;">2015</font><font style="font-family:inherit;font-size:10pt;">, we capitalized internal-use software costs of </font><font style="font-family:inherit;font-size:10pt;">$1,153,000</font><font style="font-family:inherit;font-size:10pt;"> and we amortized </font><font style="font-family:inherit;font-size:10pt;">$662,000</font><font style="font-family:inherit;font-size:10pt;"> of these costs. During the years ended December 31, </font><font style="font-family:inherit;font-size:10pt;">2016</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">2015</font><font style="font-family:inherit;font-size:10pt;">, we recorded impairment losses of </font><font style="font-family:inherit;font-size:10pt;">$64,000</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$7,000</font><font style="font-family:inherit;font-size:10pt;">, respectively, for certain discrete projects that were abandoned. These charges are recognized as &#8220;Impairment Charges&#8221; on our Consolidated Statements of Operations.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Deferred Financing Costs</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Deferred financing costs relate to fees and expenses incurred in connection with entering into our debt agreements (see Note 7) and are amortized as interest expense over the contractual lives of the related credit facilities. As of </font><font style="font-family:inherit;font-size:10pt;">December&#160;31, 2016</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">2015</font><font style="font-family:inherit;font-size:10pt;">, deferred financing costs of </font><font style="font-family:inherit;font-size:10pt;">$125,000</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$197,000</font><font style="font-family:inherit;font-size:10pt;">, respectively, are included as a direct reduction of the carrying amount of our debt. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Concentration of Credit Risk</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, and trade accounts receivable. We place our cash primarily in commercial checking accounts. Commercial bank balances may from time to time exceed federal insurance limits. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Property and Equipment</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Property and equipment are stated at cost and are depreciated over the estimated useful lives of the related assets, which range from </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> to </font><font style="font-family:inherit;font-size:10pt;">five</font><font style="font-family:inherit;font-size:10pt;"> years. Leasehold improvements are amortized over the shorter of either the asset&#8217;s useful life or the related lease term. Depreciation is computed on the straight-line method for financial reporting purposes. Property and equipment include fixed assets subject to capital leases which are depreciated over the life of the respective asset. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Income Taxes</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We use the asset and liability method to determine our income tax expense or benefit. Deferred tax assets and liabilities are computed based on temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that are expected to be in effect when the differences are expected to be recovered or settled. Any resulting net deferred tax assets are evaluated for recoverability and, accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Stock-based Compensation</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Stock-based awards have been accounted for as required by ASC Topic 718 </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">&#8220;Compensation &#8211; Stock Compensation&#8221;</font><font style="font-family:inherit;font-size:10pt;"> (&#8220;ASC Topic 718&#8221;). Under ASC Topic 718 stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period.&#160; The Company values its stock option awards using the Black-Scholes option valuation model. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Research and Development</font><font style="font-family:inherit;font-size:10pt;"> </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Research and development expenses include internal and external costs related to the development of new service offerings and features and enhancements to our existing services. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Recent Accounting Pronouncements</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2014, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued Accounting Standards Update ASU 2014-09, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers&#8221; </font><font style="font-family:inherit;font-size:10pt;">(Subtopic 606), which supersedes most existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We continue to evaluate the impact of the pending adoption of ASU 2014-09 on our consolidated financial statements and believe that the Company will use the retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The Company has commenced analysis of our revenue streams and the application of the standard. Management does not expect the adoption of ASU 2014-09 to have a material impact on our financial statements and disclosures. </font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In November 2015, the FASB issued ASU 2015-17, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Income Taxes</font><font style="font-family:inherit;font-size:10pt;">&#8221; (Subtopic 740). The amendments in this update require deferred tax liabilities and assets be classified as non-current regardless of the classification of the underlying assets and liabilities. For public companies, the amendments will be effective for financial statements issued for annual periods beginning after December 15, 2016. Earlier application is permitted. Management does not expect the adoption of ASU 2015-17 to have a material impact on our financial statements and disclosures. </font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the FASB created Topic 842 and issued ASU 2016-02, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Leases</font><font style="font-family:inherit;font-size:10pt;">&#8221;. The guidance in this update supersedes Topic 840, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Leases</font><font style="font-family:inherit;font-size:10pt;">&#8221;. This ASU requires lessees to recognize a right-of-use assets and a lease liability, initially measured at the present value of the lease payments on the balance sheet. For public companies, the amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on our financial statements and disclosures.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued ASU 2016-09, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Compensation - Stock Compensation</font><font style="font-family:inherit;font-size:10pt;">&#8221; (Subtopic 718). The guidance in this update includes amendments that require excess tax benefits or deficiencies resulting from share-based payments be recognized in the income statement as a component of the provision for income taxes, whereas previously these were recognized within additional paid-in capital. Further, the new guidance provides an accounting policy election to account for forfeitures as they occur. The new standard also amends the presentation of employee share-based payment related items in the statement of cash flows by requiring that: (i) excess tax benefits be classified as cash inflows provided by operating activities, and (ii) cash paid to taxing authorities arising from the withholding of shares from employees be classified as cash outflows used in financing activities. For public companies, the amendments will be effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for any interim or annual period. Management does not expect the adoption of ASU 2016-09 to have a material impact on our financial statements and disclosures.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In August 2016, the FASB issued ASU 2016-09, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments&#8221; </font><font style="font-family:inherit;font-size:10pt;">(Subtopic 230). This guidance clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The amendment addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. These updates are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. The guidance should be applied retrospectively unless it is impractical to do so&#894; in which case, the guidance should be applied prospectively as of the earliest date practicable. Management is currently evaluating the impact of the adoption of ASU 2016-09 on our financial statements and disclosures.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In November 2016, the FASB issued ASU 2016-18, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Statement of Cash Flows-Restricted Cash</font><font style="font-family:inherit;font-size:10pt;">&#8221;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> </font><font style="font-family:inherit;font-size:10pt;">(Subtopic 230). These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The amendments do not provide definition of restricted cash or restricted cash equivalents. Effective date for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. Management does not expect the adoption of ASU 2016-18 to have any impact on our financial statements and disclosures, as restricted cash is currently included in the change of cash on the statement of cash flows.</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font></div><div style="line-height:120%;text-align:left;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2017, the FASB issued ASU 2017-04, &#8220;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment</font><font style="font-family:inherit;font-size:10pt;">&#8221; (Subtopic 350). This guidance simplifies the accounting for goodwill impairment by removal of Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit&#8217;s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. For public companies, the standard will be effective for calendar year-end December 15, 2020. Earlier adoption is permitted for any impairment test performed after January 1, 2017. Management is currently evaluating the impact of the adoption of ASU 2017-04 on our financial statements and disclosures.</font></div></div>
CY2016 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Reclassification</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Certain prior year amounts have been reclassified to conform with the current year presentation.</font></div></div>
CY2016 us-gaap Revenue Recognition Accounting Policy Gross And Net Revenue Disclosure
RevenueRecognitionAccountingPolicyGrossAndNetRevenueDisclosure
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Taxes Billed to Customers and Remitted to Taxing Authorities</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. </font></div></div>
CY2016 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (&#8220;U.S. GAAP&#8221;) 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 the estimates made. We continually evaluate estimates used in the preparation of our consolidated financial statements for reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include determining the allowance for doubtful accounts, deferred tax valuation allowance, accrued sales taxes and regulatory fees, stock-based compensation, the valuation of goodwill, the valuation of intangible assets and their estimated lives, and the estimated lives and recoverability of property and equipment. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></div>

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