10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

  X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:                                                      March 31, 2014

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to    

Commission File Number:                                                      000-19301                      

COMMUNICATION INTELLIGENCE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-2790442
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

   275 Shoreline Drive, Suite 500, Redwood Shores, CA  94065-1413

          (Address of principal executive offices)                  (Zip Code)

(650) 802-7888

Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

large accelerated filer accelerated filer non-accelerated filer   X Smaller reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Section 12b-2 of the exchange Act)

Yes No X

Number of shares outstanding of the issuer's Common Stock, as of May 15, 2014: 232,559,488.

INDEX

	Page No.
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2014 (unaudited) and December 31, 2013	3
Condensed Consolidated Statements of Operations for the Three-Month Periods Ended March 31, 2014 and 2013 (unaudited)	4
Condensed Consolidated Statements of Comprehensive Loss for the Three Month Periods Ended March 31, 2014 and 2013 (unaudited)	5
Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2014 and 2013 (unaudited)	6
Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.  Controls and Procedures	21
PART II.  OTHER INFORMATION
Item 1.    Legal Proceedings	22
Item 1A. Risk Factors	22
Item 2.    Unregistered Sale of Securities and Use of Proceeds	22
Item 3.    Defaults Upon Senior Securities	22
Item 4.    Mine Safety Disclosures	22
Item 5.    Other Information	22
Item 6.    Exhibits
(a) Exhibits	22
Signatures	25

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PART I–FINANCIAL INFORMATION

Item 1.  Financial Statements.

Communication Intelligence Corporation

Condensed Consolidated Balance Sheets

 (In thousands)

	March 31,			December 31,
	2014			2013
Assets	Unaudited
Current assets:
Cash and cash equivalents	$	1,147		$	945
Accounts receivable, net of allowance of $17 at March 31, 2014 and $22 at December 31, 2013		278			410
Prepaid expenses and other current assets		58			57
Total current assets		1,483			1,412
Property and equipment, net		18			17
Patents, net		1,201			1,290
Other assets		29			29
Total assets	$	2,731		$	2,748
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		185			327
Accrued compensation		311			315
Other accrued liabilities		240			232
Deferred revenue		512			490
Total current liabilities		1,248			1,364
Deferred revenue long-term		19			74
Deferred rent		75			86
Derivative liability		20			25
Total liabilities		1,362			1,549
Commitments and contingencies
Stockholders' equity:
Series A-1 Preferred Stock, $.01 par value; 2,000 shares authorized; 1,052 and 1,031 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively, ($1,052 liquidation preference at March 31, 2014)		1,052			1,031
Series B Preferred Stock, $.01 par value; 14,000 shares authorized; 11,377 and 11,102 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively, ($17,066 liquidation preference at March 31, 2014)		9,506			9,232
Series C Preferred Stock, $.01 par value; 9,000 shares authorized; 4,619 and 4,508 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively, ($6,929 liquidation preference at March  31, 2014)		5,197			5,086
Series D-1 Preferred Stock, $.01 par value; 6,000 shares authorized; 4,302 and 3,415 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively, ($4,302 liquidation preference at March 31, 2014)		3,693			3,345
Series D-2 Preferred Stock, $.01 par value; 9,000 shares authorized; 5,303 and 4,783 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively, ($5,303 liquidation preference at March 31, 2014)		4,252			4,002
Common Stock, $.01 par value; 1,500,000 shares authorized; 232,560 issued, and outstanding at March 31, 2014 and December 31, 2013		2,390			2,390
Treasury shares, 6,500 shares at March 31, 2014 and December 31, 2013		(325	)		(325	)
Additional paid in capital		96,399			96,172
Accumulated deficit		(120,245	)		(119,184	)
Accumulated other comprehensive loss		(14	)		(14	)
Total CIC stockholders' equity		1,905			1,735
Non-Controlling interest		(536	)		(536	)
Total Stockholders’ equity		1,369			1,199
Total liabilities and stockholders' equity	$	2,731		$	2,748

See accompanying notes to these Condensed Consolidated Financial Statements

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Communication Intelligence Corporation

Condensed Consolidated Statements of Operations

Unaudited

(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2014			2013
Revenue:
Product	$	128		$	71
Maintenance		173			164
Total revenue		301			235
Operating costs and expenses:
Cost of sales:
Product		4			5
Maintenance		54			73
Research and development		540			512
Sales and marketing		308			309
General and administrative		463			596
Total operating costs and expenses		1,369			1,495
Loss from operations		(1,068	)		(1,260	)
Other income (expense), net		2			(1	)
Gain  on derivative liability		5			64
Net loss		(1,061	)		(1,197	)
Accretion of beneficial conversion feature, Preferred Stock:
Related party		(73	)		(33	)
Other		(301	)		(22	)
Preferred stock dividends:
Related party		(328	)		(262	)
Other		(293	)		(216	)
Income tax		-			-
Net loss before non-controlling interest		(2,056	)		(1,730	)
Net loss attributable to non-controlling interest		−			−
Net loss attributable to common stockholders’	$	(2,056	)	$	(1,730	)
Basic and diluted net loss per common share	$	(0.01	)	$	(0.01	)
Weighted average common shares outstanding, basic and diluted		232,560			225,875

See accompanying notes to these Condensed Consolidated Financial Statements

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Communication Intelligence Corporation

Condensed Consolidated Statements of Comprehensive Loss

Unaudited

(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2014			2013
Net loss	$	(1,061	)	$	(1,197	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustment	─				14
Total comprehensive loss	$	(1,061	)	$	(1,183	)

See accompanying notes to these Condensed Consolidated Financial Statements

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Communication Intelligence Corporation

Condensed Consolidated Statements of Cash Flows

Unaudited

(In thousands)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net loss	$	(1,061	)	$	(1,197	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		92			96
Stock-based employee compensation		92			254
Gain on derivative liability		(5	)		(64	)
Changes in operating assets and liabilities:
Accounts receivable		132			591
Prepaid expenses and other assets		(1	)		9
Accounts payable		(142	)		74
Accrued compensation		(4	)		(41	)
Other accrued liabilities		(3	)		−
Deferred revenue		(33	)		(38	)
Net cash used for operating  activities		(933	)		(316	)
Cash flows from investing activities: Acquisition of property and equipment		(4	)		(2	)
Net cash used for investing activities		(4	)		(2	)
Cash flows from financing activities:
Proceeds from exercise of warrants for cash		−			29
Proceeds from issuance of Series D preferred Stock, net ofissuance costs of $51		1,139			−
Net cash provided by financing activities		1,139			29
Effect of exchange rate changes on cash and cash equivalents		−			−
Net increase (decrease) in cash and cash equivalents		202			(289	)
Cash and cash equivalents at beginning of period		945			486
Cash and cash equivalents at end of period	$	1,147		$	197

See accompanying notes to these Condensed Consolidated Financial Statements

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Communication Intelligence Corporation

Condensed Consolidated Statements of Cash Flows (Continued)

Unaudited

(In thousands)

	Three Months Ended March 31,
	2014		2013
Supplementary disclosure of cash flow information
Interest paid	$  ─		$	−
Income taxes paid	$  ─		$	−
Non-cash financing and investing transactions:
Dividends on Preferred Stock	$	621	$	478
Accretion of beneficial conversion feature on issuance of convertible Preferred Stock	$	306	$	−
Accretion of beneficial conversion feature on issuance of  Preferred Stock dividends	$	68	$	55

See accompanying notes to these Condensed Consolidated Financial Statements

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

1.   Nature of business and summary of significant accounting policies

Basis of Presentation

The financial information contained herein should be read in conjunction with the Company's consolidated audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2013.

The accompanying unaudited condensed consolidated financial statements of Communication Intelligence Corporation and its subsidiary (the “Company” or “CIC”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company’s results of operations and cash flows for the periods presented.  The Company’s interim results are not necessarily indicative of the results to be expected for the entire year.

The Company is a leading supplier of electronic signature products and the recognized leader in biometric signature verification. CIC enables companies to achieve truly paperless workflow in their electronic business processes by providing multiple signature technologies across virtually all applications. CIC’s solutions are available both in software-as-a-service (“SaaS”) and on-premise delivery models and afford “straight-through-processing,” which can increase customer revenue by enhancing user experience and can also reduce costs through paperless and virtually error-free electronic transactions that can be completed significantly quicker than paper-based procedures. To date, the Company primarily has delivered biometric and electronic signature solutions to channel partners and end-user customers in the financial services industry.

The Company's research and development activities have given rise to numerous technologies and products. The Company's core technologies can be referred to as "transaction-enabling” technologies. These technologies include various forms of electronic signatures, such as handwritten biometric, click-to-sign and others, as well signature verification, cryptography and the logging of audit trails to show signers’ intent. These technologies can enable secure, legal and regulatory compliant electronic transactions that can enhance customer experience at a fraction of the time and cost required by traditional, paper-based processes. The Company’s products include SignatureOne® Ceremony® Server, the iSign® suite of products and services, including iSign® Enterprise and iSign® Console™, Sign-it® and the iSign® toolkits.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Except for 2004, the Company has incurred significant losses since its inception and, at March 31, 2014, the Company’s accumulated deficit was approximately $120,245. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of March 31, 2014, the Company’s cash balance was approximately $1,147. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

1.   Nature of business and summary of significant accounting policies

eliminate some or all of its operations, which may have a material adverse effect on the Company's business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Reclassifications

Certain prior year amounts have been reclassified between Series C Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock and Additional paid in capital on the accompanying condensed consolidated balance sheet to properly reflect accretion of the beneficial conversion feature on certain issuances of the Company’s Preferred Stock. These reclassifications do not impact the condensed consolidated statement of operations or the condensed consolidated statement of cash flows.

Accounting Changes and Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations and cash flows.

2.         Concentrations

The following table summarizes accounts receivable and revenue concentrations:

	Accounts Receivable As of March 31,						Total Revenue for the three months ended March 31,
	2014			2013			2014			2013
Customer #1		32	%		37	%		12	%
Customer #2		26	%
Customer #3		18	%					22	%
Customer #4					18	%
Customer #5					18	%
Customer #6								12	%		15	%
Customer #7											15	%
Total concentration		76	%		73	%		46	%		30	%

3.   Patents

The Company performs intangible asset impairment analysis at least annually or whenever circumstances or events indicate such assets might be impaired. The Company would recognize an impairment charge in the event the net book value of such assets exceeded the future undiscounted cash flows attributable to such assets.

Management completed an analysis of the Company’s patents as of December 31, 2013. Based on that analysis, the Company concluded that no impairment of the carrying value of the patents existed. The Company believes that no events or circumstances changed during the three months ended March 31, 2014 that would impact this conclusion.

Amortization of patent costs was $89 for the three months ended March 31, 2014 and $92 for the three months ended March 31, 2013, respectively.

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

Intangible Assets

The following table summarizes intangible assets:

	March 31, 2014					December 31, 2013
	Carrying Amount		Accumulated Amortization			Carrying Amount		Accumulative Amortization
Amortizable intangible assets:
Patents	$	6,745	$	(5,544	)	$	6,745	$	(5,455	)

4.   Derivative liability

The Company has determined that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company’s own stock and (b) classified in stockholders’ equity in the statement of financial position would not be considered a derivative financial instrument. The Company applies a two-step model in determining whether a financial instrument or an embedded feature is indexed to an issuer’s own stock and thus able to qualify for the scope exception.

The Company issued certain warrants in connection with financing transactions from 2010 through 2012 that require liability classification because of certain provisions that may have resulted in an adjustment to the number of shares issued upon settlement and an adjustment to their exercise price. The Company classifies these warrants on its balance sheet as a derivative liability which is fair valued at each reporting period subsequent to the initial issuance. The Company used a simulated probability valuation model to value these warrants. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. Any change in the estimates (specifically, probabilities) used may cause the value to be higher or lower than that reported. The assumptions used in the model required significant judgment by management and include the following: volatility, expected term, risk-free interest rate, dividends, warrant holders’ expected rate of return, reset provisions based on expected future financings, projected stock prices, and probability of exercise. The estimated volatility of the Company’s common stock at the date of issuance, and at each subsequent reporting period, is based on historical volatility. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. Dividends are estimated at 0% based on the Company’s history of no common stock dividends.

The fair value of the outstanding derivative liabilities at March 31, 2014, and December 31, 2013, was $20 and $25, respectively.

Fair value measurements:

Assets and liabilities measured at fair value as of March 31, 2014, are as follows:

	Value at		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	March 31, 2014		(Level 1)		(Level 2)		(Level 3)
Derivative liability	$	20	$	−	$	−	$	20
	December 31, 2013
Derivative liability	$	25	$  ─		$ ─		$	25

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

4.   Derivative liability

The fair value framework requires a categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s assets and liabilities measured at fair value, whether recurring or non-recurring, at March 31, 2014, and December 31, 2013, and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category.

Changes in the fair market value of the Level 3 derivative liability for the three month period ended March 31, 2014 are as follows:

	Derivative Liability
Balance at January 1, 2014	$	25
Gain on derivative liability		(5	)
Balance at March 31, 2014	$	20

5.   Net loss per share

The Company calculates basic net loss per share, based on the weighted average number of shares outstanding, and when applicable, diluted income per share, which is based on the weighted average number of shares and potential dilutive shares outstanding.

The following table lists shares and warrants that were excluded from the calculation of dilutive earnings per share as the exercise of such options and warrants and the conversion of such preferred shares would be anti-dilutive:

	For the three Months Ended
	March 31, 2014		March 31, 2013
Stock options		72,038		70,270
Warrants		94,240		149,022
Preferred shares as if converted
Series A-1Preferred Stock		7,513		6,941
Series B Preferred Stock		17,065		237,866
Series C Preferred Stock		205,294		190,146
Series D-1 Preferred Stock		191,189		51,193
Series D-2 Preferred Stock		106,069		67,682

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

5.   Net loss per share

The following table is a reconciliation of the numerator (net loss) and the denominator (number of shares) used in the basic and diluted EPS calculations and sets forth potential shares of Common Stock that are not included in the diluted net loss per share calculation as the effect is antidilutive:

	Three Months Ended
	March 31,			March 31,
	2014			2013
Numerator-basic and diluted net loss	$	(2,056	)	$	(1,730	)
Denominator-basic or diluted weighted average number of common shares outstanding		232,560			225,875
Net loss per share – basic and diluted	$	(0.01	)	$	(0.01	)

6.   Equity

Share-based compensation expense is based on the estimated grant date fair value of the portion of share-based payment awards that are ultimately expected to vest during the period.  The grant date fair value of stock-based awards to employees and directors is calculated using the Black Scholes valuation model.

Forfeitures of share-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated average forfeiture rate for the three months ended March 31, 2014 and 2013, was approximately 9.76% and 9.73%, respectively, based on historical data.

Valuation and Expense Information:

The weighted-average fair value of stock-based compensation is based on the Black Scholes valuation model. Forfeitures are estimated and it is assumed no dividends will be declared.  The estimated fair value of stock-based compensation awards to employees is amortized over the vesting period of the options. The fair value calculations are based on the following assumptions:

	Three Months Ended March 31, 2014	Three Months Ended March 31, 2013
Risk free interest rate	0.04% – 4.92%	0.62% – 5.11%
Expected term (years)	3.33 – 6.21	2.82 – 7.00
Expected volatility	91.99% – 198.38%	93.63% – 147.41%
Expected dividends	None	None

The Company granted 2,500 stock options during the three months ended March 31, 2014, at a weighted average exercise price of $0.027 per share. No stock options were exercised during the three month period ended March 31, 2014.

The Company granted 26,241 stock options during the three months ended March 31, 2013, at a weighted average exercise price of $0.04 per share. No stock options were exercised during the month period ended March 31, 2013.

The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three months ended March 31:

	2014		2013
Research and development	$	27	$	68
Sales and marketing		12		25
General and administrative		48		146
Director		5		15
Total Stock-based compensation	$	92	$	254

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

6.   Equity

A summary of option activity under the Company’s plans as of March 31, 2014 and 2013 is as follows:

	2014								2013
Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value		Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1,		69,537	$	0.05			$	−		44,529		$	0.05			$	2,230
Granted		2,500	$	0.03			$	7		26,241		$	0.04			$	1,179
Exercised		-	$	-			$	−	─			$	−			$	−
Forfeited or expired		−	$	−			$	−		(500	)	$	0.09			$	43
Outstanding at March 31		72,037	$	0.05		4.85	$	7		70,270		$	0.05		5.75	$	3,367
Vested and expected to vest at March 31		65,007	$	0.05		4.41	$	7		70,270		$	0.05		5.05	$	3,367
Exercisable at March 31		48,445	$	0.05		5.05	$	−		27,036		$	0.05		5.05	$	1,043

The following tables summarize significant ranges of outstanding and exercisable options as of March 31, 2014:

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price		Number Outstanding		Weighted Average Exercise Price
$	0.02 – $0.50		72,037		4.85	$	0.05		48,445	$	0.05

A summary of the status of the Company’s non-vested shares as of March 31, 2014, is as follows:

Non-vested Shares	Shares			Weighted Average Grant-Date Fair Value
Non-vested at January 1, 2014		26,158		$	0.04
Granted		2,500		$	0.03
Exercised	─			$ ─
Forfeited	─			$ ─
Vested		(5,066	)	$	0.04
Non-vested at March 31, 2014		23,592		$	0.04

As of March 31, 2014, there was $292 of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the plans.  The unrecognized compensation expense is expected to be realized over a weighted average period of 1.1 years.

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

6.   Equity

Preferred Stock

Information with respect to the class of Preferred Stock as of March 31, 2014 is as follows:

Class of Preferred Stock	Issue Date	Annual Dividend			Annual Dividend Payable, in Cash or In Kind	Liquidation Preference		Conversion Price		Total Preferred Shares Outstanding		Common Shares to be issued if Fully Converted
Series A-1	May 2008		8	%	Quarterly in Arrears	$	1.00	$	0.1400		1,052		7,514
Series B	August 2010		10	%	Quarterly in Arrears	$	1.50	$	0.0433		11,377		262,559
Series C	December/March 2011		10	%	Quarterly in Arrears	$	1.50	$	0.0225		4,619		205,294
Series D-1	November 2012/May and December 2013/February and March 2014		10	%	Quarterly in Arrears	$	1.00	$	0.0225		4,302		191,189
Series D-2	November   2012/ May and December 2013/February and March 2014		10	%	Quarterly in Arrears	$	1.00	$	0.0500		5,303		106,068

Information with respect to dividends issued on the Company’s Preferred stock for the period ended March 31, is as follows:

	March 31,				March 31,
	2014		2013		2014		2013
	Dividends				Beneficial Conversion Feature Related to dividends
Series A-1	$	20	$	19	$  ─		$  ─
Series B		274		248	─		─
Series C		111		103		37		43
Series D-1		93		28		31		12
Series D-2		123		81	─		─
Total	$	621	$	478	$	68	$	55

Series A-1 Preferred Stock

The shares of Series A-1 Preferred Stock are convertible any time and are subordinate to the Series B, Series C and Series D Preferred Stock.

Series B Preferred Stock

The shares of Series B Preferred Stock are convertible at any time and are subordinate to the Series C and Series D Preferred Stock.

Series C Preferred Stock

The shares of Series C Preferred Stock are convertible into Common Stock at any time and are subordinate to the Series D Preferred Stock.

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

6.   Equity

Series D Preferred Stock

The material terms of the Series D-1 and Series D-2 Preferred Stock, other than the initial conversion price, are essentially the same. The shares of Series D Preferred Stock are convertible at any time and rank senior to the Company’s outstanding shares of Series A-1, Series B and Series C Preferred Stock, and of Common Stock with respect to dividend rights and liquidation preferences.

In May 2013, the Company completed a private placement of 230 units of Series D Preferred Stock consisting of one (1) share of Series D-1 Preferred Stock and four (4) shares of Series D-2 Preferred Stock. The private placement provided $1,150 in proceeds to the Company.

On December 31, 2013, the Company converted approximately $1,179 of short-term debt plus accrued interest into 786 shares of Series D-1 Preferred Stock and 393 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire three (3) years from the date of issuance. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

On December 31, 2013, the Company sold for $870 in cash, net of $40 administrative fee paid to SG Phoenix, 607 Shares of Series D-1 preferred Stock and 303 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire three (3) years from the date of issuance. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

In connection with the December 31, 2013, offering, the Company adjusted the number of shares of Series D-1 Preferred Stock and Series D-2 Preferred Stock issued to investors in the May 2013 offering described above, in order to give such investors shares of Series D-1 Preferred Stock and Series D-2 Preferred Stock in the same ratio as offered to Investors in the December 31, 2013, offering. This resulted in an exchange of 537 shares of Series D-2 Preferred into Series D-1 Preferred. The Company also issued warrants to purchase Common Stock in the same manner as offered to investors in the December 31, 2013, offering.

On February 7, 2014, the Company sold for $733 in cash, net of $47 administrative fee paid in cash to SG Phoenix and a nonrelated third party, 520 Shares of Series D-1 preferred Stock and 260 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire December 31, 2016. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

On March 6, 2014, the Company sold for $406 in cash, net of $4 in administrative fees paid in cash to an unrelated third party, 273 Shares of Series D-1 preferred Stock and 137 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire December 31, 2016. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

SG Phoenix received warrants to purchase 3,000 shares of Common stock, and two unrelated parties received warrants to purchase an aggregate of 1,600 shares of Common Stock in payment of administrative and finder’s fees associated with the financings, in addition to the cash payments discussed above. These warrants are immediately exercisable and expire three (3) years from the date of issuance. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

Preferred Stock Voting and Other Rights

Generally, the Company’s Preferred Stock votes together on an as converted basis with the holders of Common Stock. In addition, the Company’s Preferred Stock enjoys certain protective provisions, a liquidation preference and anti-dilution protection that are similar to one another.

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Communication Intelligence Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share amounts)

6.   Equity

Warrants

A summary of the warrant activity is as follows:

	March 31, 2014					March 31, 2013
	Warrants			Weighted Average Exercise Price		Warrants			Weighted Average Exercise Price
Outstanding at beginning of period		77,155		$	0.0289		151,722		$	0.0269
Issued		21,418			0.0275		−		$	−
Exercised		−		$	−		(1,300	)	$	0.0280
Expired		(4,333	)	$	0.0225		(1,400	)	$	0.0225
Outstanding at end of period		94,240		$	0.0289		149,022		$	0.0257
Exercisable at end of period		94,240		$	0.0289		149,022		$	0.0257

A summary of the status of the warrants outstanding and exercisable as of March 31, 2014, is as follows:

Number of Warrants		Weighted Average Remaining Life		Weighted Average Exercise Price per share
	13,069		0.71	$	0.0225
	72,528		2.77	$	0.0275
	8,643		1.31	$	0.0500
	94,240		2.35	$	0.0289

Contingent warrants

Investors that received warrants in connection with the December 13, 2013 and February 7 and March 6, 2014, offerings may receive warrants to purchase up to 89,421 additional shares of Common Stock, if the Company does not achieve certain revenue targets in the first three quarters of 2014. The Company ascribed a value of $566 to the warrants issued at closing, including the contingent warrants, using a Black Sholes valuation model. The Company also recorded a beneficial conversion feature related to the shares of Series D Preferred Stock issued in the February 7 and March 6, 2014 financings, of $305 based on the accounting conversion price of the shares of Series D Preferred Stock issued. Since the Company did not achieve the revenue target for the three month period ended March 31, 2014, the Company will issue warrants to purchase 29,952 shares of common stock promptly after filing of this Form 10-Q.

At March 31, 2014, 94,240 shares of common stock were reserved for issuance upon exercise of outstanding warrants.

7.   Subsequent event

On May 6, 2014, the Company entered into a Credit Agreement with Venture Champion Asia Limited, an affiliate of ICG Global Limited (the “Lender”).  Under the terms of the Credit Agreement, for a period of 18 months, the Company is permitted to borrow up to $2 million in unsecured indebtedness from the Lender.  Each draw is subject to a 15% original issue discount, so that borrowing the full $2 million would result in an aggregate of $2.352 million in debt with fifty percent (50%) warrant coverage and also may be converted at the Lender’s option into shares of the Company’s Common Stock at a conversion price of $0.0275 per share.

In connection with the Company’s entry into the Credit Agreement, the Company issued the Lender a warrant to purchase approximately 10,909 shares of Common Stock.

- 16 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

Forward Looking Statements

Certain statements contained in this quarterly report on Form 10-Q, including, without limitation, statements containing the words “believes”, “anticipates”, “hopes”, “intends”, “expects”, and other words of similar import, constitute “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause actual events to differ materially from expectations.  Such factors include those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, including the following:

·   Technological, engineering, manufacturing, quality control or other circumstances that could delay the sale or shipment of products;

·   Economic, business, market and competitive conditions in the software industry and technological innovations that could affect the Company’s business;

·   The Company’s inability to protect its trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and

·   General economic and business conditions and the availability of sufficient financing.

Except as otherwise required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, as a result of new information, future events or otherwise.

Item 2.                      Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto included in Part 1, Item 1 of this quarterly report on Form 10-Q and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Company’s Annual report on Form 10-K for the fiscal year ended December 31, 2013.

Overview

The Company is a leading supplier of electronic signature products and the recognized leader in biometric signature verification. CIC enables companies to achieve truly paperless workflow in their electronic business processes by providing multiple signature technologies across virtually all applications. CIC’s solutions are available both in SaaS and on-premise delivery models and afford “straight-through-processing,” which can increase customer revenue by enhancing user experience and can also reduce costs through paperless and virtually error-free electronic transactions that can be completed significantly faster than paper-based procedures. To date, the Company primarily has delivered biometric and electronic signature solutions to channel partners and end-user customers in the financial services industry.

The Company was incorporated in Delaware in October 1986. Except for the year ended December 31, 2004, in each year since its inception the Company has incurred losses. For the two-year period ended December 31, 2013, net losses attributable to common stockholders aggregated approximately $14,845, and, at March 31, 2014, the Company's accumulated deficit was approximately $120,245.

For the three months ended March 31, 2014, total revenue was $301, an increase of $66, or 28%, compared to total revenue of $235 in the prior year period. The increase in revenue is primarily attributable to an increase in the Company’s product sales for the quarter.

For the three months ended March 31, 2014, the loss from operations was $1,068, a decrease of $192, or 15%, compared with a loss from operations of $1,260 in the prior year period. The decrease in the loss from operations is primarily attributable to the increase of $66, or 28% in revenue and a decrease of $126, or 8% in operating expenses including cost of sales, compared to the prior year period.  The beneficial conversion feature on the Company’s Preferred Stock with an accounting conversion price less than the closing market price on the issuance date (Series C and Series D-1 Preferred Stock issuances and shares issued as dividends in kind), for the three months ended March 31, 2014, was $374, an increase of $319, or 580%, compared to a beneficial conversion feature of $55 in the

- 17 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

prior year period. The increase is due primarily to the closing of two Series D Preferred Stock financing rounds in February and March 2014.

Critical Accounting Policies and Estimates

Refer to Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2013 Form 10-K.

Effect of Recent Accounting Pronouncement

In the first quarter of 2014, the adoption of accounting standards had no material impact on our financial position, results of operations or cash flows.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on our financial position, results of operations and cash flows.

Results of Operations

Revenue

For the three months ended March 31, 2014, product revenue was $128, an increase of $57, or 80%, compared to product revenue of $71 in the prior year period. The increase in product revenue is primarily due to the timing of the Company’s sales opportunities for the quarter. For the three months ended March 31, 2014, maintenance revenue was $173, an increase of $9, or 5%, compared to maintenance revenue of $164 in the prior year period. The increase in maintenance revenue is primarily due to new product revenue recognized in the fourth quarter of 2013.

Cost of Sales

For the three months ended March 31, 2014, cost of sales was $58, a decrease of $20, or 26%, compared to cost of sales of $78 in the prior year period. The decrease in cost of sales is primarily attributable to a decrease in direct engineering costs associated with maintenance activities compared to the prior year period.

Operating expenses

Research and Development Expenses

For the three months ended March 31, 2014, research and development expense was $540, an increase of $28 or 5%, compared to research and development expense of $512 in the prior year period. Research and development expenses consist primarily of salaries and related costs, outside engineering, maintenance items, and allocated facilities expenses. The increase is primarily due to an increase in outside engineering expenses of $58 or 185% compared to the prior year. Other engineering expenses including payroll and related expense travel, services and subscriptions and allocated facilities expense decreased $30, or 6% compared to the prior year period, due to reductions in expenses related to customer support and the increase in the use of outside engineering services.

Sales and Marketing Expenses

For the three months ended March 31, 2014 sales and marketing expense was $308, a decrease of $1, compared to $309 in the prior year period. The decrease in sales and marketing expenses was due to a decrease of $36 or 88% in allocated engineering sales support, offset by an increase in salaries and related cost, and by an increase in expenses related to trade show activities compared to the prior year period.

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Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

General and Administrative Expenses

For the three months ended March 31, 2014, general and administrative expenses was $463, an decrease of $133, or 22% compared to general and administrative expenses of $596 in the prior year period. The decrease was primarily due to a decrease of $108, or 68% in stock compensation expense related to options grants to employees and administrative consultants in January 2013, and to reductions in other general corporate expenses of $25, or 7%, primarily related to directors and officers insurance expense and annual administrative fees associated with the inactive joint venture, compared to the prior year period.

Other income, expense, net

Other income for the three months ended March 31, 2014 was $2 , an increase of $3, or 300% compared to an expense of $1 in the prior year.  The increase was due to payments received for interest billed on past due accounts receivable during the period.

For the three months ended March 31, 2014, the gain on derivative liability was $5, a decrease of $59, or 92%, compared to the gain on derivative liability of $64 in the prior year period. The reduction in the gain on derivative liability is primarily due to the decrease in the number of outstanding derivatives and shorter remaining life of the outstanding derivatives at March 31, 2014 compared to the prior year period.

For the three months ended March 31, 2014, accretion of the beneficial conversion feature on the Company’s Preferred Stock, with an accounting conversion price less than the closing market price on the issuance date(Series C and Series D-1 Preferred Stock), that was issued in the Series D Financings in February and March 2014 (see Liquidity and Capital Resources), as well as dividends issued in kind was $374, an increase of $319, or 580%, compared to $55 in the prior year period. The increase is due to the Series D financings mentioned above. The accretion of the beneficial conversion feature on the Company’s Series C and Series D-1 Preferred Stock that were issued as dividends in kind and in the Series D Financing that were associated with related parties at March 31, 2014, was $73 and the non-related party expense was $301, compared to $33 and $22, in the prior year period.

Liquidity and Capital Resources

At March 31, 2014, cash and cash equivalents totaled $1,147 compared to cash and cash equivalents of $945 at December 31, 2013. The increase in cash was primarily due to cash provided by financing activities of $1,139, offset by cash used in operating activities of $933 and cash used in investing activities of $4.  At March 31, 2014, total current assets were $1,483, compared to total current assets of $1,412 at December 31, 2013. At March 31, 2014, the Company's principal sources of funds included its cash and cash equivalents aggregating $1,147.

At March 31, 2014, accounts receivable net, was $278, a decrease of $132, or 32%, compared to accounts receivable net of $410 at December 31, 2013. The decrease is due primarily to the collection of accounts receivable from the fourth quarter 2013 billings and the decrease in deferred maintenance billings during the three months ended March 31, 2014.

At March 31, 2014, prepaid expenses and other current assets were $58, an increase of $1, or 2%, compared to prepaid expenses and other current assets of $57 at December 31, 2013. The increase is due primarily to the addition of new prepaid expense being approximately equal to the write off in prepaid insurance premiums for the current period.

At March 31, 2014, accounts payable were $185, a decrease of $142, or 43%, compared to accounts payable of $327 at December 31, 2013. The decrease is due primarily to the payment of professional service and engineering fees incurred in 2013.  At March 31, 2014, accrued compensation was $311, a decrease of $4, or 1%, compared to accrued compensation of $315 at December 31, 2013.  The decrease is due primarily to a decrease in the commission accrual on sales during the month of March 2014, compared to December 31, 2013.

At March 31, 2014, total current liabilities were $1,248, a decrease of $116, or 9%, compared to total current liabilities of $1,364 at December 31, 2013. At March 31, 2014, current deferred revenue was $512, an increase of

- 19 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

$22, or 4%, compared to current deferred revenue of $490 at December 31, 2013. Deferred revenue primarily reflects advance payments for maintenance fees from the Company's licensees that are generally recognized as revenue by the Company when all obligations are met or over the term of the maintenance agreement, whichever is longer.  Deferred revenue is recorded when the Company receives advance payment from its customers.

For the three months ended March 31, 2014, the Company exercised its option to pay in kind the accrued dividends on Preferred Stock. For the three months ended March 31, 2014, the Company issued an aggregate of 20 shares of Series A-1 Preferred Stock, 274 shares of Series B Preferred Stock, 111 shares of Series C Preferred Stock, 93 shares of Series D-1 Preferred Stock and 123 shares of Series D-2 Preferred Stock in payment of dividends.

On February 7, 2014, the Company sold for $733 in cash, net of $47 administrative fee paid in cash to SG Phoenix and a nonrelated third party, 520 Shares of Series D-1 preferred Stock and 260 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable at $0.0275 per share and expire three (3) years from the date of issuance. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

On March 6, 2014, the Company sold for $406 in cash, net of $4 in administrative fees paid in cash to an unrelated third party, 273 Shares of Series D-1 preferred Stock and 137 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable at $0.0275 per share and expire three (3) years from the date of issuance. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

The Company is using the funds received from the above financings for working capital and general corporate purposes.

On May 6, 2014 the Company signed a Credit Agreement which will provide the Company access of up to $2,000 in unsecured indebtedness. See Note 7 to the Condensed Consolidated Financial Statements for more information.

The Company incurred no interest expense and no amortization of debt discount or deferred financing costs for the three months ended March 31, 2014 and 2013.

The Company had the following material commitments as of March 31, 2014:

Contractual obligations	Total		2013		2014		2015		2016		Thereafter
Operating lease commitments (1)		755		213		293		249		−		-

1.   The Company extended the lease on its offices in April 2010.  The base rent decreased by approximately 6% in November 2011 and will increase by approximately 3% per annum over the term of the new lease, which expires on October 31, 2016.

The Company has experienced recurring losses from operations that raise a substantial doubt about its ability to continue as a going concern. There can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to it when needed, or if available, will be available on favorable terms or in amounts required by it.
 

Item 3.                      Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

The Company did not enter into any short-term security investments during the three months ended March 31, 2014.

- 20 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

Foreign Currency Risk

From time to time, the Company makes certain capital equipment or other purchases denominated in foreign currencies. As a result, the Company’s cash flows and earnings are exposed to fluctuations in interest rates and foreign currency exchange rates. The Company attempts to limit these exposures through operational strategies and generally has not hedged currency exposures. During the three months ended March 31, 2014 and 2013, foreign currency translation gains and losses were insignificant.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and 15d-15 under the Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation and because of the material weaknesses in our internal control over financial reporting described below, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management identified the following control deficiencies that constitute material weaknesses that are not fully remediated as of the filing date of this report:

As a small company with limited resources that are mainly focused on the development and sales of software products and services, CIC does not employ a sufficient number of staff in its finance department to possess an optimal segregation of duties or to provide optimal levels of oversight. This has resulted in certain audit adjustments and management believes that there may be a possibility for a material misstatement to occur in future periods while it employs the current number of personnel in its finance department.

The Company does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedures are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The Company considered these limitations during the development of its disclosure controls and procedures, and will continually reevaluate them to ensure they provide reasonable assurance that such controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II-Other Information

Item 1.             Legal Proceedings.

None.

Item 1A.                      Risk Factors

Not applicable.

- 21 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

Item 2.             Unregistered Sale of Securities and Use of Proceeds.

None.

Item 3.             Defaults Upon Senior Securities.

None.

Item 4.             Mine Safety Disclosures

Not applicable

Item 5.             Other Information.

None.

Item 6.             Exhibits.

(a)             Exhibits.

Exhibit  Number	Document
3.1	Certificate of Incorporation of the Company, as amended, incorporated herein by reference to Exhibits 3.1, 3.2, 3.3 and 3.4 to the Company's Registration Statement on Form 10 (File No. 0-19301).
3.2	Certificate of Amendment to the Company's Certificate of Incorporation (authorizing the reclassification of the Class A Common Stock and Class B Common Stock into one class of Common Stock) as filed with the Delaware Secretary of State's office on November 1, 1991, incorporated herein by reference to Exhibit 3 to Amendment 1 on Form 8 to the Company's Form 8-A (File No. 0-19301).
3.3	By-laws of the Company adopted on October 6, 1986, incorporated herein by reference to Exhibit 3.5 to the Company's Registration Statement on Form 10 (File No. 0-19301).
3.4	By-laws of the Company adopted on October 6, 1986, incorporated herein by reference to Exhibit 3.5 to the Company's Registration Statement on Form 10 (File No. 0-19301).
3.5	Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation dated January 24, 2001, incorporated herein by reference to Exhibit 3.5 to the Company’s Registration Statement on Form S/1, filed December 28, 2007.
3.6	Certificate of Elimination of the Company’s Certificate of Designation of the Series A Preferred Stock dated August 17, 2001, incorporated herein by reference to Exhibit 3.6 to the Company’s Registration Statement on Form S/1, filed December 28, 2007.
3.7	Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State August 17, 2007, incorporated herein by reference to Exhibit 3.7 to the Company’s Registration Statement on Form S/1 filed on December 28, 2007.
3.8	Amended and Restated Certificate of Incorporation of the Company filed with the Delaware Secretary of State on May 18, 1995, incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2008.
3.9	Certificate of Designations, Powers, Preferences and Rights of the Series A Cumulative Convertible Preferred Stock filed with the Delaware Secretary of State on June 4, 2008, incorporated herein by reference to Exhibit 4.23 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2008.
3.10	Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on June 30, 2008, incorporated herein by reference to Exhibit 3.7 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2008.

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Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

Exhibit Number	Document
3.11	Certificate of Designations, Powers, Preferences and Rights of the Series A-1 Cumulative Convertible Preferred Stock filed with the Delaware Secretary of State on October 30, 2008, incorporated herein by reference to Exhibit 3.11 to the Company’s Annual Report on Form 10-K filed on March 12, 2009.
3.12	Certificate of Elimination of the Company’s Series A Cumulative Convertible Preferred Stock filed with the Delaware Secretary of State on December 30, 2008, incorporated herein by reference to Exhibit 3.12 to the Company’s Annual Report on Form 10-K filed on March 12, 2009.
3.13	Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on June 30, 2009, incorporated herein by reference to Exhibit 3.13 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2009.
3.14	Amendment No. 1 to By-laws dated June 17, 2010, incorporated herein by reference to Exhibit 3.14 to the Company’s Quarterly Report on Form 10-Q filed on August 16, 2010.
3.15	Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on August 4, 2010, incorporated herein by reference to Exhibit 3.15 to the Company’s Quarterly Report on Form 10-Q filed on November 12, 2010.
3.16	Amended and Restated Certificate of Designation of Series A-1 Cumulative Convertible Preferred Stock filed with the Delaware Secretary of State on August 4, 2010, incorporated herein by reference to Exhibit 3.16 to the Company’s Quarterly Report on Form 10-Q filed on November 12, 2010.
3.17	Certificate of Designation of Series B Participating Convertible Preferred Stock filed with the Delaware Secretary of State on August 4, 2010, incorporated herein by reference to Exhibit 3.17 to the Company’s Quarterly Report on Form 10-Q filed on November 12, 2010.
3.18	Certificate of Amendment to Amended And Restated Certificate of Incorporation filed with the Delaware Secretary of State on December 31, 2010, incorporated herein by reference to Exhibit 3.18 to the Company’s Annual Report on Form 10-K filed on March 30, 2011.
3.19	Second Amended and Restated Certificate of Designation of Series A-1 Cumulative Convertible Preferred Stock filed with the Delaware Secretary of State on December 31, 2010, incorporated herein by reference to Exhibit 3.19 to the Company’s Annual Report on Form 10-K filed on March 30, 2011.
3.20	Second Amended and Restated Certificate of Designation of Series B Participating Convertible Preferred Stock filed with the Delaware Secretary of State on December 31, 2010, incorporated herein by reference to Exhibit 3.20 to the Company’s Annual Report on Form 10-K filed on March 30, 2011.
3.21	Certificate of Designation of Series C Participating Convertible Preferred Stock filed with the Delaware Secretary of State on December 31, 2010, incorporated herein by reference to Exhibit 3.21 to the Company’s Annual Report on Form 10-K filed on March 30, 2011.
3.22	Amendment to the Amended And Restated Certificate of Designation of the Series B Participating Convertible Preferred Stock, incorporated herein by reference to Exhibit 10.59 to the Company’s Current Report on Form 8-K filed March 31, 2011.
3.23	Amendment to the Amended And Restated Certificate of Designation of the Series C Participating Convertible Preferred Stock, incorporated herein by reference to Exhibit 10.60 to the Company’s Current Report on Form 8-K filed March 31, 2011.
3.24	Certificate of Amendment to Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on November 13, 2012, incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement filed on Schedule 14A on October 22, 2012.
3.25	Third Amended and Restated Certificate of Designation of Series A-1 Cumulative Convertible Preferred Stock filed with the Delaware Secretary of State on November 13, 2012, incorporated herein by reference to Exhibit 3.25 to the Company’s Form 10-K filed March 31, 2014.
3.26	Second Amended and Restated Certificate of Designation of Series B Participating Convertible Preferred Stock filed with the Delaware Secretary of State on November 13, 2012, incorporated herein by reference to Exhibit 3.26 to the Company’s Form 10-K filed March 31, 2014.

- 23 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

Exhibit  Number	Document
3.27	Amended and Restated Certificate of Designation of Series C Participating Convertible Preferred Stock filed with the Delaware Secretary of State on November 13, incorporated herein by reference to Exhibit 3.27 to the Company’s Form 10-K filed March 31, 2014.
3.28	Certificate of Designation of Series D Convertible Preferred Stock filed with the Delaware Secretary of State on November 13, 2012, incorporated herein by reference to Exhibit 3.28 to the Company’s Form 10-K filed March 31, 2014.
3.29	Certificate of Amendment to Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on December 10, 2013, incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement filed on Schedule 14A on November 1, 2013.
3.30	Certificate of Amendment to Certificate of Designation of Series D Convertible Preferred Stock filed with the Delaware Secretary of State on December 31, 2013, incorporated herein by reference to Exhibit 3.30 to the Company’s Form 10-K filed March 31, 2014.
10.59	Amendment to the Amended And Restated Certificate of Designation of the Series B Participating Convertible Preferred Stock, incorporated herein by reference to Exhibit 10.59 to the Company’s Current Report on Form 8-K filed March 31, 2011.
10.60	Amendment to the Amended And Restated Certificate of Designation of the Series C Participating Convertible Preferred Stock, incorporated herein by reference to Exhibit 10.60 to the Company’s Current Report on Form 8-K filed March 31, 2011.
10.61	Form Of Subscription Agreement, incorporated herein by reference to Exhibit 10.61 to the Company’s Current Report on Form 8-K filed on April 4, 2011.
10.62	Amendment No. 1 to the Registration Rights Agreement dated March 31, 2011, incorporated herein by reference to Exhibit 10.62 to the Company’s Current Report on Form 8-K filed on April 4, 2011
10.63	Note and Warrant Purchase Agreement dated April 23, 2012, incorporated herein by reference to Exhibit 10.63 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2012.
10.64	Form of Subscription Agreement dated September 14, 2012, incorporated herein by reference to Exhibit 10.64 to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2012.
10.65	Form of Unsecured Convertible Promissory Note dated September 14, 2012, incorporated herein by reference to Exhibit 10.65 to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2012.
10.66	Form of Subscription Agreement dated May 17, 2013, incorporated herein by reference to Exhibit 10.66 to the Company’s Quarterly Report on Form 10-Q filed on August 14, 2013.
10.67	Form of Subscription Agreement dated December 31, 2013, incorporated herein by reference to Exhibit 10.67 to the Company’s Form 10-K filed March 31, 2014.
*31.1	Certification of Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certificate of Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certification of Chief Executive Officer pursuant to 18 USC Section 1750, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certification of Chief Financial Officer pursuant to 18 USC Section 1750, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Filed herewith.

- 24 -

Communication Intelligence Corporation

FORM 10-Q

(In thousands, except per share amounts)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COMMUNICATION INTELLIGENCE CORPORATION

Registrant

May 15, 2014	/s/ Andrea Goren
Date	Andrea Goren
	(Principal Financial Officer and Officer Duly Authorized to Sign on Behalf of the Registrant)

- 25 -

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip Sassower, certify that:

1.      I have reviewed this Quarterly Report on Form 10-Q of Communication Intelligence Corporation;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 15, 2014

/s/ Philip Sassower

Chairman and Chief Executive Officer

(Principal Executive Officer of Registrant)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrea Goren, certify that:

1.      I have reviewed this Quarterly Report on Form 10-Q of Communication Intelligence Corporation;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 15, 2014

//Andrea Goren

Chief Financial Officer

(Principal Financial Officer of Registrant)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip S. Sassower, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Communication Intelligence Corporation on Form 10-Q for the quarterly period ended March 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Communication Intelligence Corporation.

Date: May 15, 2014

By: /s/ Philip S. Sassower

Chairman and Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Communication Intelligence Corporation and will be retained by Communication Intelligence Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Communication Intelligence Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Communication Intelligence Corporation specifically incorporates it by reference.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrea Goren, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Communication Intelligence Corporation on Form 10-Q for the quarterly period ended March 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Communication Intelligence Corporation.

Date: May 15, 2014

By: /s/ Andrea Goren

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Communication Intelligence Corporation and will be retained by Communication Intelligence Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Communication Intelligence Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Communication Intelligence Corporation specifically incorporates it by reference.

XML

Equity (Details Textual 1) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				3 Months Ended		1 Months Ended									1 Months Ended						3 Months Ended		1 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Warrants Issued to SG Phoenix [Member]	Mar. 31, 2013 Warrants Issued to SG Phoenix [Member]	Mar. 31, 2014 Warrants Issued to Unrelated Parties [Member]	Mar. 31, 2013 Warrants Issued to Unrelated Parties [Member]	Mar. 31, 2014 Series D Preferred Stock [Member]	Feb. 28, 2014 Series D Preferred Stock [Member]	Dec. 31, 2013 Series D Preferred Stock [Member]	May 31, 2013 Series D Preferred Stock [Member]	Mar. 31, 2014 Series D One Preferred Stock [Member]	Feb. 28, 2014 Series D One Preferred Stock [Member]	Dec. 31, 2013 Series D One Preferred Stock [Member]	May 31, 2013 Series D One Preferred Stock [Member]	Feb. 07, 2014 Series D One Preferred Stock [Member] Subsequent Event [Member]	Mar. 31, 2014 Series D Two Preferred Stock [Member]	Feb. 28, 2014 Series D Two Preferred Stock [Member]	Dec. 31, 2013 Series D Two Preferred Stock [Member]	May 31, 2013 Series D Two Preferred Stock [Member]	Feb. 07, 2014 Series D Two Preferred Stock [Member] Subsequent Event [Member]	Dec. 31, 2013 Series D Two Preferred Stock For Cash [Member]	Mar. 31, 2014 February And March Two Thousand Fourteen Note And Warrant Purchase Agreement [Member] Contingent Warrants [Member]	Mar. 31, 2014 February And March Two Thousand Fourteen Note And Warrant Purchase Agreement [Member] Contingent Warrants [Member] Subsequent Event [Member]	Nov. 30, 2012 Series D Financing [Member]
Subsidiary, Sale of Stock [Line Items]
Preferred Units, Issued										230,000
Preferred Units, Components														1	2				4	1
Preferred Units, Description										Units of Series D Preferred Shares consisting of one (1) share of Series D-1 Preferred Stock with an exercise price of $0.0025 per share and four (4) shares of Series D-2 Preferred Stock at an exercise price of $0.05 per share.
Proceeds from sale of stock, net							$ 406	$ 733	$ 870	$ 1,150
Administrative fee paid to SG Phoenix							4	47	40
Number of shares sold in private placement											273,000	520,000	607,000			137,000	260,000	303,000
Conversion of short-term debt and accrued interest, net of offering costs									1,179															3,099
Shares issued in debt conversion													786,000					393,000
Warrant coverage, maximum percentage							100.00%	100.00%	100.00%
Fair Value Assumptions, Expected Term			3 years		3 years				3 years
Number of shares of Series D-2 Preferred Stock exchanged into Series D-1 Preferred Stock									537,000
Warrants, expiration date							Dec. 31, 2016	Dec. 31, 2016
Number of common shares callable by warrants				3,000,000		1,600,000																89,421,000	29,952,000
Number of common shares, reserved for issuance upon exercise of outstanding warrants	94,240,000
Purchase price per share for the shares sold in private placement																					$ 1.00
Fair value of contingent warrants																						566
Debt Instrument, Convertible, Beneficial Conversion Feature	$ 306																					$ 305

XML

Equity (Details 4) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Equity Instruments, Options, Nonvested Shares Roll-Forward
Non-vested shares, Beginning Balance	26,158
Non-vested shares, Granted	2,500
Non-vested shares, Forfeited, or expired
Non-vested shares, vested	(5,066)
Stock Options Outstanding, Ending Balance	23,592
Weighted Average Grant Date Fair Value, Options Nonvested at beginning of period	$ 0.04
Weighted Average Grant Date Fair Value, Options nonvested, grants in period	$ 0.03
Weighted Average Grant Date Fair Value, Options nonvested, forfeited in period
Weighted Average Grant Date Fair Value, Options nonvested, vested in period	$ 0.04
Weighted Average Grant Date Fair Value, Options nonvested at end of period	$ 0.04

XML

Derivative liability (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	$ 25
Gain on derivative liability	(5)
Balance at end of period	$ 20

XML

Equity (Details 8) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding and Excercisable	94,240	77,155	149,022	151,722
Weighted Average Remaining Life Of Warrants Or Rights	2 years 4 months 17 days
Warrants Weighted Average Exercise Price	$ 0.0289	$ 0.0289	$ 0.0257	$ 0.0269
Warrants Group One [Member]
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding and Excercisable	13,069
Weighted Average Remaining Life Of Warrants Or Rights	8 months 16 days
Warrants Weighted Average Exercise Price	$ 0.0225
Warrants Group Two [Member]
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding and Excercisable	72,528
Weighted Average Remaining Life Of Warrants Or Rights	2 years 9 months 7 days
Warrants Weighted Average Exercise Price	$ 0.0275
Warrants Group Three [Member]
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding and Excercisable	8,643
Weighted Average Remaining Life Of Warrants Or Rights	1 year 3 months 22 days
Warrants Weighted Average Exercise Price	$ 0.0500

XML

Patents

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Patents

3. Patents

The Company performs intangible asset impairment analysis at least annually or whenever circumstances or events indicate such assets might be impaired. The Company would recognize an impairment charge in the event the net book value of such assets exceeded the future undiscounted cash flows attributable to such assets.

Management completed an analysis of the Company's patents as of December 31, 2013. Based on that analysis, the Company concluded that no impairment of the carrying value of the patents existed. The Company believes that no events or circumstances changed during the three months ended March 31, 2014 that would impact this conclusion.

Amortization of patent costs was $89 for the three months ended March 31, 2014 and $92 for the three months ended March 31, 2013, respectively.

Intangible Assets

The following table summarizes intangible assets:

Amortizable intangible assets:	March 31, 2014		December 31, 2013
	Carrying Amount	Accumulated Amortization	Carrying Amount	Accumulated Amortization
Patents	$ 6,745	$ (5,544)	$ 6,745	$ (5,455)

XML

Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Risk-free interest rate, minimum	0.04%	0.62%
Risk-free interest rate, maximum	4.92%	5.11%
Expected volatility, minimum	91.99%	93.63%
Expected volatility, maximum	198.38%	147.41%
Expected dividend yield	$ 0	$ 0
Minimum [Member]
Fair value assumptions, stock options
Expected life	3 years 3 months 2 days	2 years 10 months 6 days
Maximum [Member]
Fair value assumptions, stock options
Expected life	6 years 10 months 17 days	7 years

XML

Net loss per share (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share Reconciliation [Abstract]
Numerator - basic and diluted net loss	$ (2,056)	$ (1,730)
Weighted average common shares outstanding, basic and diluted	232,560	225,875
Net loss per share - bacis and diluted	$ (0.01)	$ (0.01)

XML

Equity (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 90	$ 254
Research and Development Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	27	68
Selling and Marketing Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	12	25
General and Administrative Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	48	146
Director Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 5	$ 15

XML

Equity (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Summary of stock options outstanding
Stock Options Outstanding, Beginning Balance	69,537	44,529
Stock Options, Granted	2,500	26,241
Stock Options, Exercised	0	0
Stock Options, Forfeited, or expired		(500)
Stock Options Outstanding, Ending Balance	72,037	70,270
Stock Options, Vested and expected to vest at ending balance	65,007	70,270
Options exercisable	48,445	27,036
Weighted Average Exercise Price, Beginning Period	$ 0.05
Weighted Average Exercise Price, Granted	$ 0.03	$ 0.04
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Forfeited, or expired		$ 0.09
Weighted Average Exercise Price, Ending Period	$ 0.05	$ 0.05
Weighted Average Exercise Price, Vested and expected to vest at ending balance	$ 0.05	$ 0.05
Weighted Average Exercise Price, Exercisable at ending balance	$ 0.05	$ 0.05	$ 0.05
Weighted Average Remaining Contractual Term, ending balance	7 years 10 months 1 day	5 years 9 months
Weighted Average Remaining Contractual Term, vested and expected to vest at ending balance	4 years 10 months 1 day	5 years 0 months 2 days
Weighted Average Remaining Contractual Term, excercisable at ending balance	5 years 0 months 2 days	5 years 0 months 2 days
Aggregate Intrinsic Value, Beginning Balance		$ 2,230
Aggregate Intrinsic Value, Granted	7	1,179
Aggregate Intrinsic Value, Exercised
Aggregate Intrinsic Value, Forfeited or expired		43
Aggregate Intrinsic Value, Ending Balance	7	3,367
Aggregate Intrinsic Value, Vested and expected to vest at ending balance	7	3,367
Aggregate Intrinsic Value, Exercisable at ending balance		$ 1,043

XML

Concentrations

3 Months Ended

Mar. 31, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

2. Concentrations

The following table summarizes accounts receivable and revenue concentrations:

	Accounts Receivable As of March 31,		Total Revenue for the three months ended March 31,
	2014	2013	2014	2013
Customer #1	32%	37%	12%
Customer #2	26%
Customer #3	18%		22%
Customer #4		18%
Customer #5		18%
Customer #6			12%	15%
Customer #7				15%
Total concentration	76%	73%	46%	30%

XML

Equity (Details 3) (USD $) In Thousands, except Per Share data, unless otherwise specified			3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Range One [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price Range, Lower Range Limit			$ 0.07
Exercise Price Range, Upper Range Limit			$ 0.50
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, End of Period [Abstract]
Number of Outstanding Options			72,037
Outstanding Options, Weighted Average Remaining Contractual Term			4 years 10 months 1 day
Outstanding Options, Weighted Average Exercise Price	$ 0.027	$ 0.04	$ 0.05
Exercise Price Range, Number of Exercisable Options			48,445
Exercisable Options, Weighted Average Exercise Price			$ 0.05

XML

Subsequent Event (Details Textual) (Subsequent Event [Member], Venture Champion Asia Limited [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Subsequent Event [Line Items]
Subsequent Event, Date	May 06, 2014
Subsequent Event, Description	Credit Agreement
Line of Credit Facility, Current Borrowing Capacity	$ 2,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 2,352
Line of Credit Facility, Expiration Period	18 months
Conversion price	$ 0.0275
Original issue discount, percentage	15.00%
Warrant coverage, maximum percentage	50.00%
Credit Agreement Warrant [Member]
Subsequent Event [Line Items]
Number of common shares callable by warrants	10,909

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 1,147	$ 945	$ 486
Accounts receivable, net of allowance of $17 at March 31, 2014 and $22 at December 31, 2013	278	410
Prepaid expenses and other current assets	58	57
Total current assets	1,483	1,412
Property and equipment, net	18	17
Patents, net	1,201	1,290
Other assets	29	29
Total assets	2,731	2,748
Current liabilities:
Accounts payable	185	327
Accrued compensation	311	315
Other accrued liabilities	240	232
Deferred revenue	512	490
Total current liabilities	1,248	1,364
Deferred revenue long-term	19	74
Deferred rent	75	86
Derivative liability	20	25
Total liabilities	1,362	1,549
Commitments and Contingencies
Stockholders' deficit
Common Stock, $0.01 par value; 1,500,000 shares authorized; 232,559 issued and outstanding at March 31, 2014 December 31, 2013	2,390	2,390
Treasury shares, 6,500 shares at March 31, 2014 and December 31, 2013 respectively	(325)	(325)
Additional paid in capital	96,399	96,172
Accumulated deficit	(120,245)	(119,184)
Accumulated other comprehensive loss	(14)	(14)
Total CIC stockholder's equity (deficit)	1,905	1,735
Non-Controlling interest	(536)	(536)
Total stockholders' equity (deficit)	1,369	1,199	(357)
Total liabilities and shareholders' equity	2,731	2,748
Series A-1 Preferred Stock [Member]
Stockholders' deficit
Preferred stock by class of stock	1,052	1,031	880
Total stockholders' equity (deficit)	1,052	1,031	880
Series B Preferred Stock [Member]
Stockholders' deficit
Preferred stock by class of stock	9,506	9,232	7,380
Total stockholders' equity (deficit)	9,506	9,232	7,380
Series C Preferred Stock [Member]
Stockholders' deficit
Preferred stock by class of stock	5,197	5,086	3,569
Total stockholders' equity (deficit)	5,197	5,085	3,569
Series D-1 Preferred Stock [Member]
Stockholders' deficit
Preferred stock by class of stock	3,693	3,345
Total stockholders' equity (deficit)	3,693	3,345
Series D-2 Preferred Stock [Member]
Stockholders' deficit
Preferred stock by class of stock	4,252	4,002
Total stockholders' equity (deficit)	$ 4,252	$ 4,002

XML

Condensed Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Comprehensive income:
Net loss	$ (1,061)	$ (1,197)
Foreign currency translation adjustment		14
Total comprehensive loss	$ (1,061)	$ (1,183)

XML

Equity (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Dividends Net of Beneficial Conversion Feature	$ 621	$ 478
Accretion of beneficial conversion feature related to dividends	68	55
Series A Preferred Stock [Member]
Dividends Net of Beneficial Conversion Feature	20	19
Accretion of beneficial conversion feature related to dividends
Series B Preferred Stock [Member]
Dividends Net of Beneficial Conversion Feature	274	248
Accretion of beneficial conversion feature related to dividends
Series C Preferred Stock [Member]
Dividends Net of Beneficial Conversion Feature	111	103
Accretion of beneficial conversion feature related to dividends	37	43
Series D One Preferred Stock [Member]
Dividends Net of Beneficial Conversion Feature	93	28
Accretion of beneficial conversion feature related to dividends	31	12
Series D Two Preferred Stock [Member]
Dividends Net of Beneficial Conversion Feature	123	81
Accretion of beneficial conversion feature related to dividends

XML

Patents (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Amortizable intangible assets
Finite-lived intangible assets, gross	$ 6,745	$ 6,745
Finite-Lived intangible assets, accumulated amortization	$ (5,544)	$ (5,455)

XML

Equity (Details 7) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Class Of Warrant Or Right Number Of Warrants Or Rights Roll Forward
Number of Warrants Outstanding at beginning of period	77,155	151,722
Number of warrants issued	21,418
Number Of Warrants Or Rights Exercised		(1,300)
Number Of Warrants Or Rights Expired	(4,333)	(1,400)
Number of Warrants Outstanding at end of period	94,240	149,022
Number of Warrants Or Rights Exercisable at end of period	94,240	149,022
Excercise Price of Warrants Outstanding at beginning of period	$ 0.0289	$ 0.0269
Exercise Price Of Warrants Issued	$ 0.0275
Exercise Price Of Warrants Exercised		$ 0.0280
Exercise Price Of Warrants Expired	$ 0.0225	$ 0.0225
Excercise Price of Warrants Outstanding at end of period	$ 0.0289	$ 0.0257
Exercise Price Of WarrantsExercisable at end of period	$ 0.0289	$ 0.0257

XML

Derivative liability (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Liabilities measured at fair value
Derivative liability	$ 20	$ 25
Fair Value, Inputs, Level 1 [Member]
Liabilities measured at fair value
Derivative liability
Fair Value, Inputs, Level 2 [Member]
Liabilities measured at fair value
Derivative liability
Fair Value, Inputs, Level 3 [Member]
Liabilities measured at fair value
Derivative liability	$ 20	$ 25

XML

Nature of business, basis of presentation and summary of significant accounting policies

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of business, basis of presentation and summary of significant accounting policies

1. Nature of business and summary of significant accounting policies

Basis of Presentation

The financial information contained herein should be read in conjunction with the Company's consolidated audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2013.

The accompanying unaudited condensed consolidated financial statements of Communication Intelligence Corporation and its subsidiary (the "Company" or "CIC") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company's results of operations and cash flows for the periods presented. The Company's interim results are not necessarily indicative of the results to be expected for the entire year.

The Company is a leading supplier of electronic signature products and the recognized leader in biometric signature verification. CIC enables companies to achieve truly paperless workflow in their electronic business processes by providing multiple signature technologies across virtually all applications. CIC's solutions are available both in software-as-a-service ("SaaS") and on-premise delivery models and afford "straight-through-processing," which can increase customer revenue by enhancing user experience and can also reduce costs through paperless and virtually error-free electronic transactions that can be completed significantly quicker than paper-based procedures. To date, the Company primarily has delivered biometric and electronic signature solutions to channel partners and end-user customers in the financial services industry.

The Company's research and development activities have given rise to numerous technologies and products. The Company's core technologies can be referred to as "transaction-enabling" technologies. These technologies include various forms of electronic signatures, such as handwritten biometric, click-to-sign and others, as well signature verification, cryptography and the logging of audit trails to show signers' intent. These technologies can enable secure, legal and regulatory compliant electronic transactions that can enhance customer experience at a fraction of the time and cost required by traditional, paper-based processes. The Company's products include SignatureOne® Ceremony® Server, the iSign® suite of products and services, including iSign® Enterprise and iSign® Console™, Sign-it® and the iSign® toolkits.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Except for 2004, the Company has incurred significant losses since its inception and, at March 31, 2014, the Company's accumulated deficit was approximately $120,245. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of March 31, 2014, the Company's cash balance was approximately $1,147. These factors raise substantial doubt about the Company's ability to continue as a going concern.

There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company's business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Reclassifications

Certain prior year amounts have been reclassified between Series C Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock and Additional paid in capital on the accompanying condensed consolidated balance sheet to properly reflect accretion of the beneficial conversion feature on certain issuances of the Company's Preferred Stock. These reclassifications do not impact the condensed consolidated statement of operations or the condensed consolidated statement of cash flows.

Accounting Changes and Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company's financial position, results of operations and cash flows.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Accounts receivable, allowance	$ 17,000	$ 22,000
Stockholders' deficit
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	1,500,000,000	1,500,000,000
Common Stock, shares issued	232,560,000	232,560,000
Common Stock, shares outstanding	232,560,000	232,560,000
Treasury shares	6,500,000	6,500,000
Series A-1 Preferred Stock [Member]
Stockholders' deficit
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	1,052,000	1,031,000
Preferred stock, shares outstanding	1,052,000	1,031,000
Preferred stock, liquidation preference	1,052,000
Series B Preferred Stock [Member]
Stockholders' deficit
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	14,000,000	14,000,000
Preferred stock, shares issued	11,377,000	11,102,000
Preferred stock, shares outstanding	11,377,000	11,102,000
Preferred stock, liquidation preference	17,066,000
Series C Preferred Stock [Member]
Stockholders' deficit
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	9,000,000	9,000,000
Preferred stock, shares issued	4,619,000	4,508,000
Preferred stock, shares outstanding	4,619,000	4,508,000
Preferred stock, liquidation preference	6,929,000
Series D-1 Preferred Stock [Member]
Stockholders' deficit
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	6,000,000	6,000,000
Preferred stock, shares issued	4,302,000	3,415,000
Preferred stock, shares outstanding	4,302,000	3,415,000
Preferred stock, liquidation preference	4,302,000
Series D-2 Preferred Stock [Member]
Stockholders' deficit
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	9,000,000	9,000,000
Preferred stock, shares issued	5,303,000	4,783,000
Preferred stock, shares outstanding	5,303,000	4,783,000
Preferred stock, liquidation preference	$ 5,303,000

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Derivative Liability (Tables)

3 Months Ended

Mar. 31, 2014

Derivative liability [Abstract]

Liabilities measured at fair value

Assets and liabilities measured at fair value as of March 31, 2014, are as follows:

	Value at	Quoted prices in active markets	Significant other observable inputs	Significant unobservable inputs
		(Level 1)	(Level 2)	(Level 3)
	March 31, 2014
Derivative liability	$ 20	$ -	$ -	$ 20
	December 31, 2013
Derivative liability	$ 25	$ -	$ -	$ 25

Changes in the market value of the Level 3 derivative liability

Changes in the fair market value of the Level 3 derivative liability for the three month period ended March 31, 2014 are as follows:

	Derivative Liability
Balance at January 1, 2014	$ 25
Gain on derivative liability	(5)
Balance at March 31, 2014	$ 20

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Document and Entity Information (USD $)	3 Months Ended
	Mar. 31, 2014	May 15, 2014	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Communication Intelligence Corp
Entity Central Index Key	0000727634
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
EntityVoluntaryFilers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		232,559,488
Entity Public Float			$ 6,958,686

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Net loss per share (Tables)

3 Months Ended

Mar. 31, 2014

Net loss per share [Abstract]

Schedule of Antidilutive Securities Excluded from Calculation of Earnings Per Share

The following table lists shares and warrants that were excluded from the calculation of dilutive earnings per share as the exercise of such options and warrants and the conversion of such preferred shares would be anti-dilutive:

	For the three Months Ended
	March 31, 2014	March 31, 2013
Stock options	72,038	70,270
Warrants	94,240	149,022
Preferred shares as if converted
Series A-1Preferred Stock	7,513	6,941
Series B Preferred Stock	17,065	237,866
Series C Preferred Stock	205,294	190,146
Series D-1 Preferred Stock	191,189	51,193
Series D-2 Preferred Stock	106,069	67,682

Reconciliation of the numerator (net loss) and the denominator (number of shares) used in the basic and diluted EPS calculations

The following table is a reconciliation of the numerator (net loss) and the denominator (number of shares) used in the basic and diluted EPS calculations and sets forth potential shares of Common Stock that are not included in the diluted net loss per share calculation as the effect is antidilutive:

	Three Months Ended
	March 31,	March 31,
	2014	2013
Numerator-basic and diluted net loss	$ (2,056)	$ (1,730)
Denominator-basic or diluted weighted average number of common shares outstanding	232,560	225,875
Net loss per share - basic and diluted	$ (0.01)	$ (0.01)

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenue:
Product	$ 128	$ 71
Maintenance	173	164
Total revenues	301	235
Cost of sales:
Product	4	5
Maintenance	54	73
Research and development	540	512
Sales and marketing expense	308	309
General and administrative expense	463	596
Total operating costs and expenses	1,369	1,495
Loss from operations	(1,068)	(1,260)
Other expense, net	2	(1)
Gain (loss) on derivative liability	5	64
Net loss	(1,061)	(1,197)
Accretion of beneficial conversion feature, preferred shares:
Related party	(73)	(33)
Other	(301)	(22)
Preferred stock dividends:
Related party	(328)	(262)
Other	(293)	(216)
Income tax
Net loss before non-controlling interest	(2,056)	(1,730)
Net loss attributable to non-controlling interest
Net loss attributable to common stockholders	$ (2,056)	$ (1,730)
Basic and diluted loss per common share	$ (0.01)	$ (0.01)
Weighted average common shares outstanding, basic and diluted	232,560	225,875

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Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity [Abstract]

Stockholders' Equity

6. Equity

Share-based compensation expense is based on the estimated grant date fair value of the portion of share-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock-based awards to employees and directors is calculated using the Black Scholes valuation model.

Forfeitures of share-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated average forfeiture rate for the three months ended March 31, 2014 and 2013, was approximately 9.76% and 9.73%, respectively, based on historical data.

Valuation and Expense Information:

The weighted-average fair value of stock-based compensation is based on the Black Scholes valuation model. Forfeitures are estimated and it is assumed no dividends will be declared. The estimated fair value of stock-based compensation awards to employees is amortized over the vesting period of the options. The fair value calculations are based on the following assumptions:

	Three Months Ended March 31, 2014	Three Months Ended March 31, 2013
Risk free interest rate	0.04% - 4.92%	0.62% - 5.11%
Expected term (years)	3.33 - 6.21	2.82 - 7.00
Expected volatility	91.99% - 198.38%	93.63% - 147.41%
Expected dividends	None	None

The Company granted 2,500 stock options during the three months ended March 31, 2014, at a weighted average exercise price of $0.027 per share. No stock options were exercised during the three month period ended March 31, 2014.

The Company granted 26,241 stock options during the three months ended March 31, 2013, at a weighted average exercise price of $0.04 per share. No stock options were exercised during the month period ended March 31, 2013.

The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three months ended March 31:

	2014	2013
Research and development	$ 27	$ 68
Sales and marketing	12	25
General and administrative	48	146
Director	5	15
Total Stock-based compensation	$ 92	$ 254

A summary of option activity under the Company's plans as of March 31, 2014 and 2013 is as follows:

Options	2014				2013
	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1,	69,537	$ 0.05		$ -	44,529	$ 0.05		$ 2,230
Granted	2,500	$ 0.03		$ 7	26,241	$ 0.04		$ 1,179
Exercised	-	$ -		$ -	-	$ -		$ -
Forfeited or expired	-	$ -		$ -	(500)	$ 0.09		$ 43
Outstanding at March 31	72,037	$ 0.05	4.85	$ 7	70,270	$ 0.05	5.75	$ 3,367
Vested and expected to vest at March 31	65,007	$ 0.05	4.41	$ 7	70,270	$ 0.05	5.05	$ 3,367
Exercisable at March 31	48,445	$ 0.05	5.05	$ -	27,036	$ 0.05	5.05	$ 1,043

The following tables summarize significant ranges of outstanding and exercisable options as of March 31, 2014:

Range of Exercise Prices	Options Outstanding			Options Exercisable
	Number Outstanding	Weighted Average Remaining Contractual Term (in years)	Weighted Average Exercise Price	Number Outstanding	Weighted Average Exercise Price
$ 0.07 - $0.50	72,037	4.85	$ 0.05	48,445	$ 0.05

A summary of the status of the Company's non-vested shares as of March 31, 2014, is as follows:

Non-vested Shares	Shares	Weighted Average Grant-Date Fair Value
Non-vested at January 1, 2014	26,158	$ 0.04
Granted	2,500	$ 0.03
Exercised	-	$ -
Forfeited	-	$ -
Vested	(5,066)	$ 0.04
Non-vested at March 31, 2014	23,592	$ 0.04

As of March 31, 2014, there was $292 of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the plans. The unrecognized compensation expense is expected to be realized over a weighted average period of 1.1 years.

Preferred Stock

Information with respect to the class of Preferred Stock as of March 31, 2014 is as follows:

Class of Preferred Stock	Issue Date	Annual Dividend	Annual Dividend Payable, in Cash or In Kind	Liquidation Preference	Conversion Price	Total Preferred Shares Outstanding	Common Shares to be issued if Fully Converted
Series A-1	May 2008	8%	Quarterly in Arrears	$ 1.00	$ 0.1400	1,052	7,514
Series B	August 2010	10%	Quarterly in Arrears	$ 1.50	$ 0.0433	11,377	262,559
Series C	December/March 2011	10%	Quarterly in Arrears	$ 1.50	$ 0.0225	4,619	205,294
Series D-1	November 2012/May and December 2013/February and March 2014	10%	Quarterly in Arrears	$ 1.00	$ 0.0225	4,302	191,189
Series D-2	November 2012/May and December 2013/February and March 2014	10%	Quarterly in Arrears	$ 1.00	$ 0.0500	5,303	106,068

Information with respect to dividends issued on the Company's Preferred stock for the period ended March 31, is as follows:

	March 31,		March 31,
	2014	2013	2014	2013
	Dividends		Beneficial Conversion Feature Related to dividends
Series A-1	$ 20	$ 19	$ -	$ -
Series B	274	248	-	-
Series C	111	103	37	43
Series D-1	93	28	31	12
Series D-2	123	81	-	-
Total	$ 621	$ 478	$ 68	$ 55

Series A-1 Preferred Stock

The shares of Series A-1 Preferred Stock are convertible any time and are subordinate to the Series B, Series C and Series D Preferred Stock.

Series B Preferred Stock

The shares of Series B Preferred Stock are convertible at any time and are subordinate to the Series C and Series D Preferred Stock.

Series C Preferred Stock

The shares of Series C Preferred Stock are convertible into Common Stock at any time and are subordinate to the Series D Preferred Stock.

Series D Preferred Stock

The material terms of the Series D-1 and Series D-2 Preferred Stock, other than the initial conversion price, are essentially the same. The shares of Series D Preferred Stock are convertible at any time and rank senior to the Company's outstanding shares of Series A-1, Series B and Series C Preferred Stock, and of Common Stock with respect to dividend rights and liquidation preferences.

In May 2013, the Company completed a private placement of 230 units of Series D Preferred Stock consisting of one (1) share of Series D-1 Preferred Stock and four (4) shares of Series D-2 Preferred Stock. The private placement provided $1,150 in proceeds to the Company.

On December 31, 2013, the Company converted approximately $1,179 of short-term debt plus accrued interest into 786 shares of Series D-1 Preferred Stock and 393 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire three (3) years from the date of issuance. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

On December 31, 2013, the Company sold for $870 in cash, net of $40 administrative fee paid to SG Phoenix, 607 Shares of Series D-1 preferred Stock and 303 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire three (3) years from the date of issuance. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

In connection with the December 31, 2013, offering, the Company adjusted the number of shares of Series D-1 Preferred Stock and Series D-2 Preferred Stock issued to investors in the May 2013 offering described above, in order to give such investors shares of Series D-1 Preferred Stock and Series D-2 Preferred Stock in the same ratio as offered to Investors in the December 31, 2013, offering. This resulted in an exchange of 537 shares of Series D-2 Preferred into Series D-1 Preferred. The Company also issued warrants to purchase Common Stock in the same manner as offered to investors in the December 31, 2013, offering.

On February 7, 2014, the Company sold for $733 in cash, net of $47 administrative fee paid in cash to SG Phoenix and a nonrelated third party, 520 Shares of Series D-1 preferred Stock and 260 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire December 31, 2016. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

On March 6, 2014, the Company sold for $406 in cash, net of $4 in administrative fees paid in cash to an unrelated third party, 273 Shares of Series D-1 preferred Stock and 137 shares of Series D-2 Preferred Stock. The investors can receive up to one hundred percent (100%) warrant coverage. These warrants are immediately exercisable and expire December 31, 2016. See the warrant table below for more detail. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

SG Phoenix received warrants to purchase 3,000 shares of Common stock, and two unrelated parties received warrants to purchase an aggregate of 1,600 shares of Common Stock in payment of administrative and finder's fees associated with the financings, in addition to the cash payments discussed above. These warrants are immediately exercisable and expire three (3) years from the date of issuance. The warrants are exercisable in whole or in part and contain a cashless exercise provision.

Preferred Stock Voting and Other Rights

Generally, the Company's Preferred Stock votes together on an as converted basis with the holders of Common Stock. In addition, the Company's Preferred Stock enjoys certain protective provisions, a liquidation preference and anti-dilution protection that are similar to one another.

Warrants

A summary of the warrant activity is as follows:

	March 31, 2014		December 31, 2013
	Warrants	Weighted Average Exercise Price	Warrants	Weighted Average Exercise Price
Outstanding at beginning of period	77,155	$ 0.0289	151,722	$ 0.0269
Issued	21,418	$ 0.0275	-	$ -
Exercised	-	$ -	(1,300)	$ 0.0280
Expired	(4,333)	$ 0.0225	(1,400)	$ 0.0225
Outstanding at end of period	94,240	$ 0.0289	149,022	$ 0.0257
Exercisable at end of period	94,240	$ 0.0289	149,022	$ 0.0257

A summary of the status of the warrants outstanding and exercisable as of March 31, 2014, is as follows:

Number of Warrants	Weighted Average Remaining Life	Weighted Average Exercise Price per share
13,069	0.71	$ 0.0225
72,528	2.77	$ 0.0275
8,643	1.31	$ 0.0500
94,240	2.35	$ 0.0289

Contingent warrants

Investors that received warrants in connection with the December 13, 2013 and February 7 and March 6, 2014, offerings may receive warrants to purchase up to 89,421 additional shares of Common Stock, if the Company does not achieve certain revenue targets in the first three quarters of 2014. The Company ascribed a value of $566 to the warrants issued at closing, including the contingent warrants, using a Black Sholes valuation model. The Company also recorded a beneficial conversion feature related to the shares of Series D Preferred Stock issued in the February 7 and March 6, 2014 financings, of $305 based on the accounting conversion price of the shares of Series D Preferred Stock issued. Since the Company did not achieve the revenue target for the three month period ended March 31, 2014, the Company will issue warrants to purchase 29,952 shares of common stock promptly after filing of this Form 10-Q.

At March 31, 2014, 94,240 shares of common stock were reserved for issuance upon exercise of outstanding warrants.

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Net loss per share

3 Months Ended

Mar. 31, 2014

Net loss per share [Abstract]

Net loss per share

5. Net loss per share

The Company calculates basic net loss per share, based on the weighted average number of shares outstanding, and when applicable, diluted income per share, which is based on the weighted average number of shares and potential dilutive shares outstanding.

The following table lists shares and warrants that were excluded from the calculation of dilutive earnings per share as the exercise of such options and warrants and the conversion of such preferred shares would be anti-dilutive:

	For the three Months Ended
	March 31, 2014	March 31, 2013
Stock options	72,038	70,270
Warrants	94,240	149,022
Preferred shares as if converted
Series A-1Preferred Stock	7,513	6,941
Series B Preferred Stock	17,065	237,866
Series C Preferred Stock	205,294	190,146
Series D-1 Preferred Stock	191,189	51,193
Series D-2 Preferred Stock	106,069	67,682

The following table is a reconciliation of the numerator (net loss) and the denominator (number of shares) used in the basic and diluted EPS calculations and sets forth potential shares of Common Stock that are not included in the diluted net loss per share calculation as the effect is antidilutive:

	Three Months Ended
	March 31,	March 31,
	2014	2013
Numerator-basic and diluted net loss	$ (2,056)	$ (1,730)
Denominator-basic or diluted weighted average number of common shares outstanding	232,560	225,875
Net loss per share - basic and diluted	$ (0.01)	$ (0.01)

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Patents (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Patent amortization expense	$ 89	$ 92
Patents impairment	$ 0	$ 0

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Equity (Tables)

3 Months Ended

Mar. 31, 2014

Stockholders' Equity [Abstract]

Key assumptions for fair value calculation, stock options

The fair value calculations are based on the following assumptions:

	Three Months Ended March 31, 2014	Three Months Ended March 31, 2013
Risk free interest rate	0.04% - 4.92%	0.62% - 5.11%
Expected term (years)	3.33 - 6.21	2.82 - 7.00
Expected volatility	91.99% - 198.38%	93.63% - 147.41%
Expected dividends	None	None

Allocation of stock-based compensation expense related to stock option grants

The following table summarizes the allocation of stock-based compensation expense related to stock option grants for the three months ended March 31:

	2014	2013
Research and development	$ 27	$ 68
Sales and marketing	12	25
General and administrative	48	146
Director	5	15
Total Stock-based compensation	$ 92	$ 254

Summary of option activity

A summary of option activity under the Company's plans as of March 31, 2014 and 2013 is as follows:

Options	2014				2013
	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1,	69,537	$ 0.05		$ -	44,529	$ 0.05		$ 2,230
Granted	2,500	$ 0.03		$ 7	26,241	$ 0.04		$ 1,179
Exercised	-	$ -		$ -	-	$ -		$ -
Forfeited or expired	-	$ -		$ -	(500)	$ 0.09		$ 43
Outstanding at March 31	72,037	$ 0.05	4.85	$ 7	70,270	$ 0.05	5.75	$ 3,367
Vested and expected to vest at March 31	65,007	$ 0.05	4.41	$ 7	70,270	$ 0.05	5.05	$ 3,367
Exercisable at March 31	48,445	$ 0.05	5.05	$ -	27,036	$ 0.05	5.05	$ 1,043

Summary of the significant ranges of outstanding and exercisable options

The following tables summarize significant ranges of outstanding and exercisable options as of March 31, 2014:

Range of Exercise Prices	Options Outstanding			Options Exercisable
	Number Outstanding	Weighted Average Remaining Contractual Term (in years)	Weighted Average Exercise Price	Number Outstanding	Weighted Average Exercise Price
$ 0.07 - $0.50	72,037	4.85	$ 0.05	48,445	$ 0.05

Summary of the status of the Company's non-vested shares

A summary of the status of the Company's non-vested shares as of March 31, 2014, is as follows:

Non-vested Shares	Shares	Weighted Average Grant-Date Fair Value
Non-vested at January 1, 2014	26,158	$ 0.04
Granted	2,500	$ 0.03
Exercised	-	$ -
Forfeited	-	$ -
Vested	(5,066)	$ 0.04
Non-vested at March 31, 2014	23,592	$ 0.04

Information with respect to the classes of Preferred Stock

Information with respect to the class of Preferred Stock as of March 31, 2014 is as follows:

Class of Preferred Stock	Issue Date	Annual Dividend	Annual Dividend Payable, in Cash or In Kind	Liquidation Preference	Conversion Price	Total Preferred Shares Outstanding	Common Shares to be issued if Fully Converted
Series A-1	May 2008	8%	Quarterly in Arrears	$ 1.00	$ 0.1400	1,052	7,514
Series B	August 2010	10%	Quarterly in Arrears	$ 1.50	$ 0.0433	11,377	262,559
Series C	December/March 2011	10%	Quarterly in Arrears	$ 1.50	$ 0.0225	4,619	205,294
Series D-1	November 2012/May and December 2013/February and March 2014	10%	Quarterly in Arrears	$ 1.00	$ 0.0225	4,302	191,189
Series D-2	November 2012/May and December 2013/February and March 2014	10%	Quarterly in Arrears	$ 1.00	$ 0.0500	5,303	106,068

Information with respect to dividends issued on the Company's preferred stock

Information with respect to dividends issued on the Company's Preferred stock for the period ended March 31, is as follows:

	March 31,		March 31,
	2014	2013	2014	2013
	Dividends		Beneficial Conversion Feature Related to dividends
Series A-1	$ 20	$ 19	$ -	$ -
Series B	274	248	-	-
Series C	111	103	37	43
Series D-1	93	28	31	12
Series D-2	123	81	-	-
Total	$ 621	$ 478	$ 68	$ 55

Summary of the warrants issued

A summary of the warrant activity is as follows:

	March 31, 2014		December 31, 2013
	Warrants	Weighted Average Exercise Price	Warrants	Weighted Average Exercise Price
Outstanding at beginning of period	77,155	$ 0.0289	151,722	$ 0.0269
Issued	21,418	$ 0.0275	-	$ -
Exercised	-	$ -	(1,300)	$ 0.0280
Expired	(4,333)	$ 0.0225	(1,400)	$ 0.0225
Outstanding at end of period	94,240	$ 0.0289	149,022	$ 0.0257
Exercisable at end of period	94,240	$ 0.0289	149,022	$ 0.0257

Status of the warrants outstanding

A summary of the status of the warrants outstanding and exercisable as of March 31, 2014, is as follows:

Number of Warrants	Weighted Average Remaining Life	Weighted Average Exercise Price per share
13,069	0.71	$ 0.0225
72,528	2.77	$ 0.0275
8,643	1.31	$ 0.0500
94,240	2.35	$ 0.0289

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Concentration (Tables)

3 Months Ended

Mar. 31, 2014

Risks and Uncertainties [Abstract]

Schedule of accounts receivable and revenue concentration

The following table summarizes accounts receivable and revenue concentrations:

	Accounts Receivable As of March 31,		Total Revenue for the three months ended March 31,
	2014	2013	2014	2013
Customer #1	32%	37%	12%
Customer #2	26%
Customer #3	18%		22%
Customer #4		18%
Customer #5		18%
Customer #6			12%	15%
Customer #7				15%
Total concentration	76%	73%	46%	30%

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Subsequent event

3 Months Ended

Mar. 31, 2014

Subsequent Event [Abstract]

Subsequent event

7. Subsequent event

On May 6, 2014, the Company entered into a Credit Agreement with Venture Champion Asia Limited, an affiliate of ICG Global Limited (the "Lender"). Under the terms of the Credit Agreement, for a period of 18 months, the Company is permitted to borrow up to $2 million in unsecured indebtedness from the Lender. Each draw is subject to a 15% original issue discount, so that borrowing the full $2 million would result in an aggregate of $2.352 million in debt with fifty percent (50%) warrant coverage and also may be converted at the Lender's option into shares of the Company's Common Stock at a conversion price of $0.0275 per share.

In connection with the Company's entry into the Credit Agreement, the Company issued the Lender a warrant to purchase approximately 10,909 shares of Common Stock.

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Nature of business, basis of presentation and summary of significant accounting policies (Policies)

3 Months Ended

Mar. 31, 2014

Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of Communication Intelligence Corporation and its subsidiary (the "Company" or "CIC") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included in this quarterly report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of its financial position at the dates presented and the Company's results of operations and cash flows for the periods presented. The Company's interim results are not necessarily indicative of the results to be expected for the entire year.

Going concern and management plans

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Except for 2004, the Company has incurred significant losses since its inception and, at March 31, 2014, the Company's accumulated deficit was approximately $120,245. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of March 31, 2014, the Company's cash balance was approximately $1,147. These factors raise substantial doubt about the Company's ability to continue as a going concern.

There can be no assurance that the Company will be successful in securing adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company's business, results of operations and ability to operate as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified between Series C Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock and Additional paid in capital on the accompanying condensed consolidated balance sheet to properly reflect accretion of the beneficial conversion feature on certain issuances of the Company's Preferred Stock. These reclassifications do not impact the condensed consolidated statement of operations or the condensed consolidated statement of cash flows.

Recently issued accounting pronouncement

Accounting Standards Issued But Not Yet Adopted

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company's financial position, results of operations and cash flows.

Patents

The Company performs intangible asset impairment analysis at least annually or whenever circumstances or events indicate such assets might be impaired. The Company would recognize an impairment charge in the event the net book value of such assets exceeded the future undiscounted cash flows attributable to such assets.

Derivatives policy

The Company has determined that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company's own stock and (b) classified in stockholders' equity in the statement of financial position would not be considered a derivative financial instrument. The Company applies a two-step model in determining whether a financial instrument or an embedded feature is indexed to an issuer's own stock and thus able to qualify for the scope exception.

Fair Value of Financial Instruments

The Company issued certain warrants in connection with financing transactions from 2010 through 2012 that require liability classification because of certain provisions that may have resulted in an adjustment to the number of shares issued upon settlement and an adjustment to their exercise price. The Company classifies these warrants on its balance sheet as a derivative liability which is fair valued at each reporting period subsequent to the initial issuance. The Company used a simulated probability valuation model to value these warrants. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. Any change in the estimates (specifically, probabilities) used may cause the value to be higher or lower than that reported. The assumptions used in the model required significant judgment by management and include the following: volatility, expected term, risk-free interest rate, dividends, warrant holders' expected rate of return, reset provisions based on expected future financings, projected stock prices, and probability of exercise. The estimated volatility of the Company's common stock at the date of issuance, and at each subsequent reporting period, is based on historical volatility. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. Dividends are estimated at 0% based on the Company's history of no common stock dividends.

Fair value measurement

The fair value framework requires a categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Net loss per share

The Company calculates basic net loss per share, based on the weighted average number of shares outstanding, and when applicable, diluted income per share, which is based on the weighted average number of shares and potential dilutive shares outstanding.

Share-based payment

Share-based compensation expense is based on the estimated grant date fair value of the portion of share-based payment awards that are ultimately expected to vest during the period. The grant date fair value of stock-based awards to employees and directors is calculated using the Black Scholes valuation model.

Forfeitures of share-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

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Patents (Tables)

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

The following table summarizes intangible assets:

Amortizable intangible assets:	March 31, 2014		December 31, 2013
	Carrying Amount	Accumulated Amortization	Carrying Amount	Accumulated Amortization
Patents	$ 6,745	$ (5,544)	$ 6,745	$ (5,455)

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Equity (Details 5) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Annual Dividend	0.00%
Common Shares to be Issued if Fully Converted	772,624,000
Series A Preferred Stock [Member]
Issue Date	May 2008
Annual Dividend	8.00%
Annual Dividend Payable, in Cash or In Kind	Quarterly in Arrears
Liquidation preference	$ 1.00
Conversion price	$ 0.1400
Total Preferred Shares Outstanding	1,052,000	1,031,000
Common Shares to be Issued if Fully Converted	7,514,000
Series B Preferred Stock [Member]
Issue Date	August 2010
Annual Dividend	10.00%
Annual Dividend Payable, in Cash or In Kind	Quarterly in Arrears
Liquidation preference	1.50
Conversion price	$ 0.0433
Total Preferred Shares Outstanding	11,377,000	11,102,000
Common Shares to be Issued if Fully Converted	262,559,000
Series C Preferred Stock [Member]
Issue Date	December / March 2011
Annual Dividend	10.00%
Annual Dividend Payable, in Cash or In Kind	Quarterly in Arrears
Liquidation preference	1.50
Conversion price	$ 0.0225
Total Preferred Shares Outstanding	4,619,000	4,508,000
Common Shares to be Issued if Fully Converted	205,294,000
Series D One Preferred Stock [Member]
Issue Date	November 2012 / May and December 2013 / February and March 2014
Annual Dividend	10.00%
Annual Dividend Payable, in Cash or In Kind	Quarterly in Arrears
Liquidation preference	1.0
Conversion price	$ 0.0225
Total Preferred Shares Outstanding	4,302,000	3,415,000
Common Shares to be Issued if Fully Converted	191,189,000
Series D Two Preferred Stock [Member]
Issue Date	November 2012 / May and December 2013 / February and March 2014
Annual Dividend	10.00%
Annual Dividend Payable, in Cash or In Kind	Quarterly in Arrears
Liquidation preference	$ 1.0
Conversion price	$ 0.0500
Total Preferred Shares Outstanding	5,303,000	4,783,000
Common Shares to be Issued if Fully Converted	106,068,000

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Concentrations (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	76.00%	73.00%
Accounts Receivable [Member] | Customer One [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	32.00%	37.00%
Accounts Receivable [Member] | Customer Two[Member]
Concentration Risk [Line Items]
Concentration risk, percentage	26.00%
Accounts Receivable [Member] | Customer Three [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	18.00%
Accounts Receivable [Member] | Customer Four [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		18.00%
Accounts Receivable [Member] | Customer Five [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		18.00%
Sales Revenue, Services, Net [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	46.00%	30.00%
Sales Revenue, Services, Net [Member] | Customer One [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	12.00%
Sales Revenue, Services, Net [Member] | Customer Three [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	22.00%
Sales Revenue, Services, Net [Member] | Customer Six [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	12.00%	15.00%
Sales Revenue, Services, Net [Member] | Customer Seven [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		15.00%

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Derivative Liability (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Derivative Liability, Fair Value, Net [Abstract]
Fair value of the derivative liability	$ 20	$ 25
Annual Dividend	0.00%

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net loss	$ (1,061)	$ (1,197)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	92	96
Stock-based employee compensation	92	254
(Gain) loss on derivative liability	(5)	(64)
Changes in operating assets and liabilities:
Accounts receivable, net	132	591
Prepaid expenses and other assets	(1)	9
Accounts payable	(142)	74
Accrued Compensation	(4)	(41)
Other accrued liabilities	(3)
Deferred revenue	(33)	(38)
Net cash used in operating activities	(933)	(316)
Cash flows from investing activities:
Acquisition of property and equipment	(4)	(2)
Net cash used in investing activities	(4)	(2)
Cash flows from financing activities:
Proceeds from exercise of warrants for cash		29
Net cash provided by financing activities	1,139	29
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents	202	(289)
Cash and cash equivalents at beginning of period	945	486
Cash and cash equivalents at end of period	1,147	197
Supplemental disclosure of cash flow information:
Interest paid
Income tax paid
Non-cash financing and investing transactions:
Dividends on preferred shares	621	478
Accretion of beneficial conversion feature on issuance of convertible Preferred Stock	306
Accretion of beneficial conversion feature on issuance of Preferred Stock dividends	$ 68	$ 55

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Derivative Liability

3 Months Ended

Mar. 31, 2014

Derivative liability [Abstract]

Derivative liability

4. Derivative liability

The Company has determined that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company's own stock and (b) classified in stockholders' equity in the statement of financial position would not be considered a derivative financial instrument. The Company applies a two-step model in determining whether a financial instrument or an embedded feature is indexed to an issuer's own stock and thus able to qualify for the scope exception.

The Company issued certain warrants in connection with financing transactions from 2010 through 2012 that require liability classification because of certain provisions that may have resulted in an adjustment to the number of shares issued upon settlement and an adjustment to their exercise price. The Company classifies these warrants on its balance sheet as a derivative liability which is fair valued at each reporting period subsequent to the initial issuance. The Company used a simulated probability valuation model to value these warrants. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment. Any change in the estimates (specifically, probabilities) used may cause the value to be higher or lower than that reported. The assumptions used in the model required significant judgment by management and include the following: volatility, expected term, risk-free interest rate, dividends, warrant holders' expected rate of return, reset provisions based on expected future financings, projected stock prices, and probability of exercise. The estimated volatility of the Company's common stock at the date of issuance, and at each subsequent reporting period, is based on historical volatility. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining life of the warrants at the valuation date. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. Dividends are estimated at 0% based on the Company's history of no common stock dividends.

The fair value of the outstanding derivative liabilities at March 31, 2014, and December 31, 2013, was $20 and $25, respectively.

Fair value measurements:

Assets and liabilities measured at fair value as of March 31, 2014, are as follows:

	Value at	Quoted prices in active markets	Significant other observable inputs	Significant unobservable inputs
		(Level 1)	(Level 2)	(Level 3)
	March 31, 2014
Derivative liability	$ 20	$ -	$ -	$ 20
	December 31, 2013
Derivative liability	$ 25	$ -	$ -	$ 25

The fair value framework requires a categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's assets and liabilities measured at fair value, whether recurring or non-recurring, at March 31, 2014, and December 31, 2013, and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category.

Changes in the fair market value of the Level 3 derivative liability for the three month period ended March 31, 2014 are as follows:

	Derivative Liability
Balance at January 1, 2014	$ 25
Gain on derivative liability	(5)
Balance at March 31, 2014	$ 20

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Net loss per share (Details) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Series A Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	7,513	6,941
Series B Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	17,065	237,866
Series C Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	205,294	190,146
Series D One Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	191,189	51,193
Series D Two Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	106,069	67,682
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	72,038	70,270
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, shares	94,240	149,022

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Equity (Details Textual) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Arrangements with Employees and Nonemployees [Abstract]
Estimated average forfeiture rate	9.76%	9.73%
Stock Options, Granted	2,500	26,241
Outstanding Options, Weighted Average Exercise Price	$ 0.027	$ 0.04
Stock Options, Exercised	0	0
Total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the plans	$ 292
Unrecognized compensation expense amortization period	1 year 1 month 6 days

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Nature of business, basis of presentation and summary of significant accounting policies (Details Textual) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and Cash Equivalents, at Carrying Value	$ 1,147	$ 945	$ 197	$ 486
Accumulated deficit	$ (120,245)	$ (119,184)