x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 77-0312442 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1776 Lincoln Street, Suite 1300, Denver, CO | 80203 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (303) 640-3838 | ||
Securities registered pursuant to Section 12(b) of the Exchange Act: | ||
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.0001 par value | NYSE American |
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ý |
(Do not check if a smaller reporting company) | Emerging growth company | ¨ |
Item | Page | |
PART I | ||
1. | Business | |
1A. | Risk Factors | |
1B. | Unresolved Staff Comments | |
2. | Properties | |
3. | Legal Proceedings | |
4. | Mine Safety Disclosures | |
PART II | ||
5. | Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities | |
6. | Selected Financial Data | |
7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
7A. | Qualitative and Quantitative Disclosures About Market Risk | |
8. | Financial Statements and Supplemental Data | |
9 | Change in and Disagreements with Accountants on Accounting and Financial Disclosure | |
9A. | Controls and Procedures | |
9B. | Other Information | |
PART III | ||
10. | Directors, Executive Officers and Corporate Governance | |
11. | Executive Compensation | |
12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
13. | Certain Relationships and Related Transactions, and Director Independence | |
14. | Principal Accounting Fees and Services | |
PART IV | ||
15. | Exhibits and Financial Statement Schedules | |
Signatures |
• | customer acceptance and demand for our video collaboration services and network applications; |
• | the quality and reliability of our services; |
• | the prices for our services; |
• | customer renewal rates; |
• | customer acquisition costs; |
• | our ability to compete effectively in the video collaboration services and network services businesses; |
• | actions by our competitors, including price reductions for their competitive services, |
• | potential federal and state regulatory actions; |
• | our need for and the availability of adequate working capital; |
• | our ability to innovate technologically; |
• | our ability to fulfill our obligations under our debt instruments; |
• | our ability to comply with financial covenants under our debt instruments; |
• | our ability to satisfy the standards for continued listing on the NYSE American; |
• | changes in our capital structure and/or stockholder mix; |
• | the costs, disruption, and diversion of management’s attention associated with campaigns commenced by activist investors; and |
• | our management’s ability to execute its plans, strategies and objectives for future operations, including but not limited to transforming our product line to more automated / software-based solutions in order for us to service the rapidly evolving video communications market. |
• | Cloud Connect: Video™: Allows our customers to outsource the management of their video traffic to us and provides the customer’s office locations with a secure, dedicated video network connection to the Glowpoint Cloud for video communications. |
• | Cloud Connect: Converge™: Provides customized Multiprotocol Label Switching (“MPLS”) solutions for customers who require a converged network. A converged network is an efficient network solution that combines the customer’s voice, video, data, and Internet traffic over one or more common access circuits. Glowpoint fully manages and prioritizes traffic to ensure that video and other business critical applications run smoothly. |
• | Cloud Connect: Cross Connect™: Allows the customer to leverage their existing carrier for the extension of a Layer 2 private line to Glowpoint’s data center. |
• | increasing mobility of the workforce; |
• | shifting priorities of business decision makers, including an increased preference for cloud delivery of applications, software-defined networking, and management of multiple and varied devices; and |
• | the rise of multi-channel customer service involving multiple modes of communications. |
1. | We have invested in research and development and new technologies to develop and provide a more comprehensive suite of support systems and real-time analytics; |
2. | We continue to evolve our product design philosophy, anticipating demand for products that are cloud and mobile enabled but also flexible, extensible, secure and reliable. The goal is to allow our customers to transition from old communications and collaboration technology to more comprehensive (unified) applications in a way that is manageable and highly cost-effective. |
3. | We have increased our focus on re-packaging our products and services into simple, easy to purchase “bundles.” These bundles address the challenges faced by our customers and offer the advantage of being customizable where necessary to meet customer needs. |
• | Better transparency into the performance of the enterprise collaboration environment via business intelligence metrics, reporting and management dashboards; |
• | Greater scale with self-service support, giving end users an easy interface for submitting/tracking tickets; |
• | Deeper expertise for managing video collaboration with access to Glowpoint’s Remote Service Management services and knowledge base; |
• | More efficiencies gained by automating manual tasks and workflows including escalations, updates/notifications, and provisioning; and |
• | Access to ITIL. |
• | U.S. Patent No. 7,200,213 was awarded in April 2007 for our live video operator assistance feature. Our “Live Operator” technology provides customers with the ability to obtain live, face-to-face assistance and has widespread application, from general video call assistance to “video concierge” services. This patent is an essential component of providing “expert on demand” and telepresence “white glove” business class support services. This patent expires November 17, 2024. |
• | U.S. Patent No. 7,664,098 was awarded in February 2010 for our real-time metering and billing for Internet Protocol (“IP”) based calls. Our “Call Detail Records” patent for IP-based calls provides the ability to meter and bill an end-user on a transactional basis, just as traditional telephone calls are billed. This unique capability is a vital development as more and more telepresence and videoconferencing calling traffic is distributed over disparate IP-based networks – rather than ISDN – as business-to-business calling has become more common for video users. This patent expires August 4, 2026. |
• | U.S. Patent No. 7,916,717 was awarded in March 2011 for our Systems and Method for Automated Routing of Incoming and Outgoing Video Calls between IP and ISDN networks. This technology ensures the simple and seamless migration from ISDN to IP for the purpose of connecting IP users with ISDN systems around the world. This automated call routing capability has been leveraged to provide a least cost routing and gateway method to customers. This patent expires September 16, 2028. |
• | U.S. Patent No. 8,259,152 was awarded in September 2012 for our Video Call Distributor, which includes systems and methods for distributing high quality real time video calls over an IP Packet-Based Wide Area Network, leveraging existing routing rules and logic of a call management system. This patent expires July 3, 2031. |
• | U.S. Patent No. 8,576,270 was awarded in November 2013 for our Intelligent Call Management and Redirection systems and methods. These systems and methods can be used to detect the status of a specified video endpoint. |
• | U.S. Patent No. 8,933,983 was awarded in January 2015 for our Intelligent Call Management and Redirection systems and methods. This new patent relates to a method for routing packet-based network video calls using an Intelligent Call Policy Management (“ICPM”) system that can detect the status of a specified video endpoint and refuse to connect a video call based on the video endpoint’s status. This patent expires October 11, 2025. |
High | Low | ||||||
Year Ended December 31, 2016 | |||||||
First Quarter | $ | 0.63 | $ | 0.30 | |||
Second Quarter | 0.47 | 0.25 | |||||
Third Quarter | 0.36 | 0.21 | |||||
Fourth Quarter | 0.39 | 0.14 | |||||
Year Ended December 31, 2017 | |||||||
First Quarter | $ | 0.39 | $ | 0.22 | |||
Second Quarter | 0.61 | 0.23 | |||||
Third Quarter | 0.40 | 0.19 | |||||
Fourth Quarter | 0.65 | 0.21 |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Stock Options (a) | Weighted Average Exercise Price of Outstanding Stock Options (b) | Number of Securities to be Issued Upon Vesting of Outstanding Restricted Stock Units (*) (c) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Columns (a) & (c)) | |||||||||
Equity compensation plans approved by security holders | 1,201,764 | $ | 1.99 | 2,739,440 | 1,367,561 |
Year Ended December 31, ($ in thousands) | |||||||||||||
2017 | % of Revenue | 2016 | % of Revenue | ||||||||||
Revenue | |||||||||||||
Video collaboration services | $ | 8,958 | 60 | % | $ | 10,853 | 57 | % | |||||
Network services | 5,562 | 38 | % | 7,915 | 41 | % | |||||||
Professional and other services | 279 | 2 | % | 450 | 2 | % | |||||||
Total revenue | $ | 14,799 | 100 | % | $ | 19,218 | 100 | % |
• | Revenue for video collaboration services decreased $1,895,000 (or 17%) to $8,958,000 in 2017, from $10,853,000 in 2016. This $1,895,000 decrease is mainly attributable to the following: (i) 40% of this decrease is due to lower demand for video meeting suites as a result of increased usage of desktop and mobile video products and technologies, (ii) 37% of this decrease is due to lower revenue from existing customers (either from reductions in price or level of services), and (iii) 21% of this decrease is due to loss of customers to competition between 2016 to 2017. |
• | Revenue for network services decreased $2,353,000 (or 30%) to $5,562,000 in 2017 from $7,915,000 in 2016. This decrease is mainly attributable to net attrition of customers and lower demand for our services given the competitive environment and pressure on pricing that exists in the network services business. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Net income (loss) | $ | 5,785 | $ | (3,533 | ) | ||
Income tax benefit | (230 | ) | (79 | ) | |||
Depreciation and amortization | 1,621 | 1,959 | |||||
Interest and other (income) expense, net | (7,922 | ) | 1,527 | ||||
EBITDA | (746 | ) | (126 | ) | |||
Stock-based compensation | 458 | 929 | |||||
Stock-based expense | — | 204 | |||||
Impairment charges | 1,713 | 675 | |||||
Adjusted EBITDA | $ | 1,425 | $ | 1,682 |
Page | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets at December 31, 2017 and 2016 | |
Consolidated Statements of Operations for the years ended December 31, 2017 and 2016 | |
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2017 and 2016 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016 | |
Notes to Consolidated Financial Statements |
Exhibit Number | Description | |
2.1 | Agreement and Plan of Merger dated August 12, 2012 (filed as Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on August 13, 2012, and incorporated herein by reference). | |
3.1 | Amended and Restated Certificate of Incorporation (filed as Appendix D to View Tech, Inc.’s Registration Statement on Form S-4 (File No. 333-95145) filed with the SEC on January 21, 2000, and incorporated herein by reference). | |
3.2 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Wire One Technologies, Inc. changing its name to Glowpoint, Inc. (filed as Exhibit 3.2 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 30, 2004, and incorporated herein by reference). | |
3.3 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Glowpoint, Inc. increasing its authorized common stock to 150,000,000 shares from 100,000,000 shares (filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on September 24, 2007, and incorporated herein by reference). | |
3.4 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Glowpoint, Inc. effecting a one-for-four reverse stock split of the common stock of Glowpoint, Inc. (filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on January 13, 2011, and incorporated herein by reference). | |
3.5 | Amended and Restated By-laws (filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on December 8, 2011, and incorporated herein by reference). | |
4.1 | Specimen Common Stock Certificate (filed as Exhibit 4.1 to Registrant’s Annual Report on Form 10-K filed with the SEC on June 6, 2007, and incorporated herein by reference). | |
4.2 | Certificate of Designations, Preferences and Rights of Series D Preferred Stock (filed as Exhibit 4.6 to Registrant’s Current Report on Form 8-K filed with the SEC on September 24, 2007, and incorporated herein by reference). | |
4.3 | Certificate of Designations, Preferences and Rights of Series A-2 Preferred Stock of Glowpoint (filed as Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the SEC on August 11, 2009, and incorporated herein by reference). | |
4.4 | Certificate of Designations, Preferences and Rights of Perpetual Series B Preferred Stock of Glowpoint (filed as Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the SEC on March 30, 2010, and incorporated herein by reference). | |
4.5 | Certificate of Designations, Preferences and Rights of Perpetual Series B-1 Preferred Stock of Glowpoint (filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on August 9, 2011, and incorporated herein by reference). | |
4.6 | Warrant to Purchase Shares of Common Stock, by and between Glowpoint, Inc. and Super G Capital, LLC, dated as of July 31, 2017 (filed as Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on August 1, 2017, and incorporated herein by reference). | |
4.7 | Certificate of Designations of Rights, Powers, Preferences, Privileges and Restrictions of the 0% Series B Convertible Preferred Stock (filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2017, and incorporated herein by reference). | |
4.8 | Certificate of Designations of Rights, Powers, Preferences, Privileges and Restrictions of the 0% Series C Convertible Preferred Stock (filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on January 25, 2018, and incorporated herein by reference). | |
10.1# | Glowpoint, Inc. 2000 Stock Incentive Plan (filed as Exhibit 4.9 to Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2000, and incorporated herein by reference). | |
10.2# | Glowpoint, Inc. 2007 Stock Incentive Plan, as amended through June 1, 2011 (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on June 2, 2011, and incorporated herein by reference). | |
10.3# | Form of Stock Option Award Agreement (filed as Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed with the SEC on March 15, 2012, and incorporated herein by reference). | |
10.4# | Form of Restricted Stock Award Agreement (filed as Exhibit 99.2 to Registrant’s Current Report on Form 8-K filed with the SEC on March 15, 2012, and incorporated herein by reference). | |
10.5# | Glowpoint, Inc. 2014 Equity Incentive Plan (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on June 2, 2014, and incorporated herein by reference). | |
10.6# | 2015 Form of Performance-Vested Restricted Stock Unit Agreement (Executive Officers) (filed as Exhibit 10.6 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). |
10.7# | 2015 Form of Performance-Vested Restricted Stock Unit Agreement (Employees) (filed as Exhibit 10.7 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). | |
10.8# | 2016 Form of Performance-Vested Restricted Stock Unit Agreement (Executive Officers) (filed as Exhibit 10.8 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2017, and incorporated herein by reference). | |
10.9# | 2016 Form of Performance-Vested Restricted Stock Unit Agreement (Employees) (filed as Exhibit 10.9 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2017, and incorporated herein by reference). | |
10.10# | Form of Time-Vested Restricted Stock Unit Agreement (Executive Officers) (filed as Exhibit 10.8 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). | |
10.11# | Form of Time-Vested Restricted Stock Unit Agreement (Employees) (filed as Exhibit 10.9 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). | |
10.12# | Form of Restricted Stock Grant Agreement (filed as Exhibit 10.12 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2017, and incorporated herein by reference). | |
10.13# | Form of Director Restricted Stock Unit Agreement (filed as Exhibit 10.8 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). | |
10.14 | Registration Rights Agreement, dated as of August 9, 2013, by and between Glowpoint, Inc. and GP Investment Holdings, LLC (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on August 13, 2013, and incorporated herein by reference). | |
10.15# | Amended and Restated Employment Agreement between Glowpoint, Inc. and Peter Holst, dated as of January 28, 2016 (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on January 29, 2016, and incorporated herein by reference). | |
10.16# | Employment Agreement between Glowpoint, Inc. and David Clark, dated as of March 25, 2013 (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on March 28, 2013, and incorporated herein by reference). | |
10.17# | First Amendment to Employment Agreement between Glowpoint, Inc. and David Clark, dated as of January 28, 2016 (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on January 29, 2016, and incorporated herein by reference). | |
10.18# | Severance and Release Agreement between Glowpoint, Inc. and Scott Zumbahlen, dated as of February 9, 2015 (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on February 13, 2015, and incorporated herein by reference). | |
10.19# | Severance and Release Agreement by and between Glowpoint, Inc. and Gary Iles dated June 10, 2016 (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on June 16, 2016, and incorporated herein by reference). | |
10.20# | Form of Retention Bonus Agreement (filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016, and incorporated herein by reference). | |
10.21 | Loan Agreement, dated October 17, 2013, by and among Glowpoint, Inc. and its subsidiaries and Main Street Capital Corporation, as administrative agent and collateral agent for itself and the other lenders from time to time party thereto (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on October 23, 2013, and incorporated herein by reference). | |
10.22 | First Amendment to Loan Agreement, dated February 27, 2015, by and among Glowpoint, Inc. and its subsidiaries and Main Street Capital Corporation, as administrative agent and collateral agent for itself and the other lenders from time to time party thereto (filed as Exhibit 10.26 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). | |
10.23 | Third Amended and Restated Nonnegotiable Promissory Note in favor of Shareholder Representative Services LLC, on behalf of the prior stockholders of Affinity VideoNet, Inc., dated as of February 27, 2015 (filed as Exhibit 10.27 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference). | |
10.24# | Form of Indemnification Agreement for directors and officers (filed as Exhibit 10.1 to Registrant’s Form 8-K filed with the SEC on June 2, 2014, and incorporated herein by reference). | |
10.25 | Payoff Letter, by and among Glowpoint, Inc., each of the company’s subsidiaries, Main Street Capital Corporation, and Main Street Equity Investments, Inc., dated as of July 21, 2017 (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on August 1, 2017, and incorporated herein by reference). | |
10.26 | Redemption Agreement, by and among Glowpoint, Inc., Main Street Equity Interests, Inc., Main Street Mezzanine Fund, LP, and Main Street Capital II, LP, dated as of July 27, 2017 (filed as Exhibit 10.2 to the Registrant’s Form 8-K filed with the SEC on August 1, 2017, and incorporated herein by reference). |
10.27 | Note Exchange Agreement, by and between Glowpoint, Inc. and Shareholder Representative Services LLC, dated as of July 31, 2017 (filed as Exhibit 10.3 to the Registrant’s Form 8-K filed with the SEC on August 1, 2017, and incorporated herein by reference). | |
10.28 | Business Financing Agreement, by and among Glowpoint, Inc., GP Communications, LLC and Western Alliance Bank, dated as of July 31, 2017 (filed as Exhibit 10.4 to the Registrant’s Form 8-K filed with the SEC on August 1, 2017, and incorporated herein by reference). | |
10.29 | Business Loan and Security Agreement, by and among Glowpoint, Inc. and Super G Capital, LLC, dated as of July 31, 2017 (filed as Exhibit 10.5 to the Registrant’s Form 8-K filed with the SEC on August 1, 2017, and incorporated herein by reference). | |
10.30 | Form of Securities Purchase Agreement, dated October 23, 2017 (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on October 23, 2017, and incorporated herein by reference). | |
10.31 | Form of Securities Purchase Agreement, dated January 22, 2018 (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on January 22, 2017, and incorporated herein by reference). | |
10.32 | Business Financing Modification Agreement, by and among Glowpoint, Inc., GP Communications, LLC and Western Alliance Bank, dated as of January 18, 2018 (filed as Exhibit 10.2 to the Registrant’s Form 8-K filed with the SEC on January 22, 2018, and incorporated herein by reference). | |
Business Financing Modification Agreement, by and among Glowpoint, Inc., GP Communications, LLC and Western Alliance Bank, dated as of March 5, 2018. | ||
21.1 | Subsidiaries of Glowpoint, Inc. (filed as Exhibit 21.1 to Registrant’s Annual Report on Form 10-K filed with the SEC on March 5, 2015, and incorporated herein by reference. | |
Consent of Independent Registered Public Accounting Firm-EisnerAmper LLP. | ||
24.1 | Power of Attorney (included in the signature page hereto) | |
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer. | ||
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer. | ||
Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer. | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
GLOWPOINT, INC. | ||
By: | /s/ Peter Holst | |
Peter Holst | ||
Chief Executive Officer and President |
/s/ Peter Holst | Chief Executive Officer, President and Director (Principal Executive Officer) | |
Peter Holst |
/s/ David Clark | Chief Financial Officer (Principal Financial and Accounting Officer) | |
David Clark |
/s/ Patrick Lombardi | Director and Chairman of the Board | |
Patrick Lombardi |
/s/ Kenneth Archer | Director | |
Kenneth Archer |
/s/ David Giangano | Director | |
David Giangano |
/s/ James Lusk | Director | |
James Lusk |
December 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | 3,946 | $ | 1,140 | |||
Accounts receivable, net | 1,220 | 1,635 | |||||
Prepaid expenses and other current assets | 715 | 978 | |||||
Total current assets | 5,881 | 3,753 | |||||
Property and equipment, net | 1,159 | 2,203 | |||||
Goodwill | 7,750 | 9,225 | |||||
Intangibles, net | 626 | 1,309 | |||||
Other assets | 8 | 10 | |||||
Total assets | $ | 15,424 | $ | 16,500 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 1,194 | $ | 10,660 | |||
Accounts payable | 337 | 75 | |||||
Accrued expenses and other liabilities | 1,003 | 1,212 | |||||
Accrued sales taxes and regulatory fees | 259 | 395 | |||||
Total current liabilities | 2,793 | 12,342 | |||||
Long-term liabilities: | |||||||
Deferred tax liability | — | 230 | |||||
Long-term debt, net of current portion | 369 | — | |||||
Total long-term liabilities | 369 | 230 | |||||
Total liabilities | 3,162 | 12,572 | |||||
Commitments and contingencies (see Note 13) | |||||||
Stockholders’ equity: | |||||||
Preferred stock Series A-2, convertible; $.0001 par value; $7,500 stated value; 7,500 shares authorized, 32 shares issued and outstanding and liquidation preference of $237 at December 31, 2017 and 2016, respectively | — | — | |||||
Preferred stock Series B, convertible; $.0001 par value; $1,000 stated value; 2,800 shares authorized, 450 shares issued and outstanding and liquidation preference of $450 at December 31, 2017 and none at December 31, 2016 | — | — | |||||
Common stock, $.0001 par value; 150,000,000 shares authorized; 45,161,000 shares issued and 44,510,000 outstanding at December 31, 2017 and 36,659,000 shares issued and 36,455,000 outstanding at December 31, 2016 | 5 | 4 | |||||
Treasury stock, 651,000 and 204,000 shares at December 31, 2017 and 2016, respectively | (352 | ) | (219 | ) | |||
Additional paid-in capital | 183,114 | 180,433 | |||||
Accumulated deficit | (170,505 | ) | (176,290 | ) | |||
Total stockholders’ equity | 12,262 | 3,928 | |||||
Total liabilities and stockholders’ equity | $ | 15,424 | $ | 16,500 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Revenue | $ | 14,799 | $ | 19,218 | |||
Operating expenses: | |||||||
Cost of revenue (exclusive of depreciation and amortization) | 8,606 | 11,682 | |||||
Research and development | 1,148 | 1,117 | |||||
Sales and marketing | 413 | 664 | |||||
General and administrative | 3,665 | 5,206 | |||||
Impairment charges | 1,713 | 675 | |||||
Depreciation and amortization | 1,621 | 1,959 | |||||
Total operating expenses | 17,166 | 21,303 | |||||
Loss from operations | (2,367 | ) | (2,085 | ) | |||
Interest and other (income) expense: | |||||||
Interest expense and other, net | 1,017 | 1,455 | |||||
Gain on extinguishment of debt | (9,045 | ) | — | ||||
Amortization of debt discount | 106 | 72 | |||||
Interest and other (income) expense, net | (7,922 | ) | 1,527 | ||||
Income (loss) before income taxes | 5,555 | (3,612 | ) | ||||
Income tax benefit | (230 | ) | (79 | ) | |||
Net income (loss) | $ | 5,785 | $ | (3,533 | ) | ||
Preferred stock dividends | 70 | 12 | |||||
Net income (loss) attributable to common stockholders | $ | 5,715 | $ | (3,545 | ) | ||
Net income (loss) attributable to common stockholders per share: | |||||||
Basic net income (loss) per share | $ | 0.15 | $ | (0.10 | ) | ||
Diluted net income (loss) per share | $ | 0.14 | $ | (0.10 | ) | ||
Weighted-average number of common shares: | |||||||
Basic | 37,603 | 35,611 | |||||
Diluted | 41,440 | 35,611 |
Series A-2 Preferred Stock | Series B Preferred Stock | Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||||||||||||
Balance at December 31, 2015 | 32 | $ | — | — | — | 35,889 | $ | 4 | 179 | $ | (206 | ) | $ | 179,342 | $ | (172,757 | ) | $ | 6,383 | ||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (3,533 | ) | (3,533 | ) | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 836 | — | 836 | ||||||||||||||||||||||||||||
Equity issuance costs | — | — | — | — | — | — | — | — | (30 | ) | — | (30 | ) | ||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | 170 | — | — | — | 93 | — | 93 | ||||||||||||||||||||||||||||
Issuance of stock for UTC settlement | — | — | — | — | 600 | — | — | — | 204 | — | 204 | ||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | (12 | ) | — | (12 | ) | ||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | — | 25 | (13 | ) | — | — | (13 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2016 | 32 | — | — | — | 36,659 | 4 | 204 | (219 | ) | 180,433 | (176,290 | ) | 3,928 | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | 5,785 | 5,785 | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 458 | — | 458 | ||||||||||||||||||||||||||||
Issuance of preferred stock | — | — | 2,800 | — | — | — | — | — | 2,280 | — | 2,280 | ||||||||||||||||||||||||||||
Preferred stock conversion | — | — | (2,350 | ) | — | 8,393 | 1 | — | — | (1 | ) | — | — | ||||||||||||||||||||||||||
Forfeited restricted stock | — | — | — | — | (14 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of stock on vested restricted stock units | — | — | — | — | 123 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | (12 | ) | — | (12 | ) | ||||||||||||||||||||||||||
Other equity issuance costs | — | — | — | — | — | — | — | — | (11 | ) | — | (11 | ) | ||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | — | 42 | (12 | ) | — | — | (12 | ) | ||||||||||||||||||||||||||
Purchase of treasury stock from Main Street Redemption Agreement | — | — | — | — | — | — | 7,712 | (2,313 | ) | — | — | (2,313 | ) | ||||||||||||||||||||||||||
Issuance of shares from treasury for SRS Note Exchange | — | — | — | — | — | — | (7,307 | ) | 2,192 | (33 | ) | — | 2,159 | ||||||||||||||||||||||||||
Balance at December 31, 2017 | 32 | $ | — | 450 | $ | — | 45,161 | $ | 5 | 651 | $ | (352 | ) | $ | 183,114 | $ | (170,505 | ) | $ | 12,262 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Cash flows from Operating Activities: | |||||||
Net income (loss) | $ | 5,785 | $ | (3,533 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,621 | 1,959 | |||||
Bad debt expense (recovery) | (2 | ) | 20 | ||||
Amortization of debt discount | 106 | 72 | |||||
Non-cash interest expense | 213 | — | |||||
Gain on debt extinguishment | (9,045 | ) | — | ||||
Stock-based compensation | 458 | 929 | |||||
Stock-based expense | — | 204 | |||||
Impairment charges | 1,713 | 675 | |||||
Deferred tax benefit | (230 | ) | (79 | ) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | 421 | 1,043 | |||||
Prepaid expenses and other current assets | 263 | (425 | ) | ||||
Other assets | 2 | 1 | |||||
Accounts payable | 262 | (310 | ) | ||||
Accrued expenses and other liabilities | 178 | (327 | ) | ||||
Accrued sales taxes and regulatory fees | (136 | ) | (46 | ) | |||
Net cash provided by operating activities | 1,609 | 183 | |||||
Cash flows from Investing Activities: | |||||||
Purchases of property and equipment | (133 | ) | (382 | ) | |||
Net cash used in investing activities | (133 | ) | (382 | ) | |||
Cash flows from Financing Activities: | |||||||
Principal payments under borrowing arrangements | (605 | ) | (400 | ) | |||
Proceeds from new loan agreements, net of expenses of $175 | 2,025 | — | |||||
Payment of equity issuance costs | (45 | ) | (12 | ) | |||
Proceeds from Series B preferred stock, net of expenses of $520 | 2,280 | — | |||||
Purchase of treasury stock | (2,325 | ) | (13 | ) | |||
Net cash provided by (used in) financing activities | 1,330 | (425 | ) | ||||
Increase (decrease) in cash and cash equivalents | 2,806 | (624 | ) | ||||
Cash at beginning of period | 1,140 | 1,764 | |||||
Cash at end of period | $ | 3,946 | $ | 1,140 | |||
Supplement disclosures of cash flow information: | |||||||
Cash paid during the period for interest | $ | 878 | $ | 1,116 | |||
Non-cash investing and financing activities: | |||||||
Conversion of preferred stock to common stock | $ | 1 | $ | — | |||
Extinguished debt and accrued interest in exchange for common stock | $ | 2,192 | $ | — | |||
Recognition of prepaid equity issuance costs as additional paid-in capital | $ | — | $ | 18 | |||
Accrued preferred stock dividends | $ | 12 | $ | 12 |
• | Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. |
• | Level 2 - inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. |
• | Level 3 - unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. |
December 31, | |||||||
2017 | 2016 | ||||||
Prepaid insurance | $ | 311 | $ | 321 | |||
Prepaid maintenance contracts | 164 | 84 | |||||
Prepaid software licenses | 120 | 214 | |||||
Other prepaid expenses | 104 | 125 | |||||
Due from vendors | 10 | — | |||||
Prepaid network costs | 6 | 162 | |||||
Prepaid taxes | — | 72 | |||||
Prepaid expenses and other current assets | $ | 715 | $ | 978 |
December 31, | |||||||||
2017 | 2016 | Estimated Useful Life | |||||||
Network equipment and software | $ | 7,787 | $ | 10,588 | 3 to 5 Years | ||||
Computer equipment and software | 3,165 | 3,059 | 3 to 4 Years | ||||||
Leasehold improvements | 87 | 87 | (*) | ||||||
Office furniture and equipment | 268 | 269 | 5 to 10 Years | ||||||
11,307 | 14,003 | ||||||||
Accumulated depreciation and amortization | (10,148 | ) | (11,800 | ) | |||||
Property and equipment, net | $ | 1,159 | $ | 2,203 |
December 31, | |||||||||
2017 | 2016 | Estimated Useful Life | |||||||
Customer relationships | $ | 4,335 | $ | 4,335 | 5 Years | ||||
Affiliate network | 994 | 994 | 12 Years | ||||||
Trademarks | 548 | 548 | 8 Years | ||||||
5,877 | 5,877 | ||||||||
Accumulated amortization | (5,251 | ) | (4,568 | ) | |||||
Intangible assets, net | $ | 626 | $ | 1,309 |
2018 | $ | 127 | |
2019 | 127 | ||
2020 | 113 | ||
2021 | 69 | ||
2022 | 69 | ||
Thereafter | 121 | ||
Total | $ | 626 |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred revenue | $ | 393 | $ | 25 | |||
Super G Warrant liability | 165 | — | |||||
Accrued compensation costs | 129 | 133 | |||||
Other accrued expenses | 80 | 6 | |||||
Accrued communication costs | 78 | 111 | |||||
Accrued dividends on Series A-2 Preferred Stock | 59 | 47 | |||||
Deferred rent expense | 46 | 71 | |||||
Accrued professional fees | 35 | 68 | |||||
Accrued interest expense | 18 | 658 | |||||
Customer deposits | — | 93 | |||||
Accrued expenses and other liabilities | $ | 1,003 | $ | 1,212 |
December 31, | |||||||
2017 | 2016 | ||||||
Main Street Term Loan | $ | — | $ | 9,000 | |||
SRS Note | — | 1,785 | |||||
Western Alliance Bank A/R Revolver | 800 | — | |||||
Super G Loan | 1,032 | — | |||||
Unamortized debt discounts | (269 | ) | (125 | ) | |||
Net carrying value | 1,563 | 10,660 | |||||
Less: current maturities, net of debt discount | (1,194 | ) | (10,660 | ) | |||
Long-term obligations, net of debt discount | $ | 369 | $ | — |
Western Alliance Bank | Super G Loan | Total | |||||||||
2018 | $ | 800 | $ | 570 | $ | 1,370 | |||||
2019 | — | 462 | 462 | ||||||||
$ | 800 | $ | 1,032 | $ | 1,832 |
Outstanding | Exercisable | ||||||||||||
Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | ||||||||||
Options outstanding, December 31, 2015 | 1,269 | $ | 1.98 | 960 | $ | 1.99 | |||||||
Expired | (15 | ) | 1.52 | ||||||||||
Forfeited | (32 | ) | 1.83 | ||||||||||
Options outstanding, December 31, 2016 | 1,222 | 1.99 | 1,198 | 1.99 | |||||||||
Expired | (11 | ) | 2.42 | ||||||||||
Forfeited | (9 | ) | 1.87 | ||||||||||
Options outstanding and exercisable, December 31, 2017 | 1,202 | $ | 1.99 | 1,202 | $ | 1.99 |
Outstanding and Exercisable | ||||||||
Range of price | Number of Options | Weighted Average Remaining Contractual Life (In Years) | Weighted Average Exercise Price | |||||
$0.90 – $1.44 | 56 | 4.97 | $ | 0.93 | ||||
$1.45 – $1.96 | 109 | 4.92 | 1.54 | |||||
$1.97 – $2.04 | 881 | 5.01 | 1.98 | |||||
$2.05 – $2.60 | 55 | 4.06 | 2.20 | |||||
$2.61 – $3.02 | 101 | 4.18 | 3.02 | |||||
1,202 | 4.89 | $ | 1.99 |
Restricted Shares | Weighted Average Grant Price | |||||
Unvested restricted stock outstanding, December 31, 2015 | 261 | $ | 1.58 | |||
Granted | 170 | 0.55 | ||||
Vested | (68 | ) | 1.67 | |||
Unvested restricted stock outstanding, December 31, 2016 | 363 | 1.58 | ||||
Vested | (9 | ) | 1.47 | |||
Forfeited | (13 | ) | 1.47 | |||
Unvested restricted stock outstanding, December 31, 2017 | 341 | $ | 1.06 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Cost of revenue | $ | 6 | $ | 7 | |||
Research and development | 5 | 5 | |||||
General and administrative | 47 | 149 | |||||
$ | 58 | $ | 161 |
Restricted Stock Units | Weighted Average Grant Price | |||||
Unvested restricted stock units outstanding, December 31, 2015 | 2,164 | $ | 1.02 | |||
Granted | 2,261 | 0.43 | ||||
Vested | (387 | ) | 0.92 | |||
Forfeited | (842 | ) | 1.00 | |||
Unvested restricted stock units outstanding, December 31, 2016 | 3,196 | 0.62 | ||||
Vested | (725 | ) | 0.42 | |||
Forfeited | (719 | ) | 0.94 | |||
Unvested restricted stock units outstanding, December 31, 2017 | 1,752 | $ | 0.57 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Cost of revenue | $ | 38 | $ | 35 | |||
Research and development | 54 | 39 | |||||
Sales and marketing | 9 | 8 | |||||
General and administrative | 281 | 325 | |||||
$ | 382 | $ | 407 |
Year Ended | |||||||
December 31, | |||||||
Numerator: | 2017 | 2016 | |||||
Net income (loss) | $ | 5,785 | $ | (3,533 | ) | ||
Less: preferred stock dividends | 70 | 12 | |||||
Net income (loss) attributable to common stockholders | $ | 5,715 | $ | (3,545 | ) | ||
Denominator: | |||||||
Weighted-average number of shares of common stock for basic net income (loss) per share | 37,603 | 35,611 | |||||
Add effect of dilutive securities: | |||||||
Unvested RSUs | 1,752 | — | |||||
Unvested restricted stock | 341 | — | |||||
Shares of common stock issuable upon conversion of preferred stock | 1,706 | — | |||||
Warrants | 38 | — | |||||
Weighted-average number of shares of common stock for diluted net income (loss) per share | 41,440 | 35,611 | |||||
Basic net income (loss) per share | $ | 0.15 | $ | (0.10 | ) | ||
Diluted net income (loss) per share | $ | 0.14 | $ | (0.10 | ) |
Year Ended | |||||
December 31, | |||||
2017 | 2016 | ||||
Unvested RSUs | — | 3,196 | |||
Stock options outstanding | 1,202 | 1,222 | |||
Unvested restricted stock awards | — | 363 | |||
Shares of common stock issuable upon conversion of Series A-2 preferred stock | — | 79 | |||
Warrants | 512 | — |
Year Ending December 31, | |||
2018 | $ | 308 | |
2019 | 88 | ||
2020 | 23 | ||
$ | 419 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Domestic | $ | 10,393 | $ | 14,070 | |||
Foreign | 4,406 | 5,148 | |||||
$ | 14,799 | $ | 19,218 |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Current: | |||||||
Federal | $ | — | $ | — | |||
State | $ | — | $ | — | |||
— | — | ||||||
Deferred: | |||||||
Federal | (212 | ) | (73 | ) | |||
State | (18 | ) | (6 | ) | |||
(230 | ) | (79 | ) | ||||
Income tax (benefit) expense | $ | (230 | ) | $ | (79 | ) |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
U.S. federal income taxes at the statutory rate | $ | 1,945 | $ | (1,264 | ) | ||
State taxes, net of federal effects | 146 | (108 | ) | ||||
Permanent differences | (244 | ) | 10 | ||||
Impact of state tax rate change to deferred | — | (36 | ) | ||||
Other, including effect of Tax Cuts and Jobs Act | 1,725 | (28 | ) | ||||
Change in valuation allowance | (3,802 | ) | 1,347 | ||||
Income tax (benefit) expense | $ | (230 | ) | $ | (79 | ) |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Tax benefit of operating loss carry forward | $ | 7,942 | $ | 11,612 | |||
Reserves and allowances | 1 | 12 | |||||
Accrued expenses | 73 | 35 | |||||
Charitable contributions | 134 | 198 | |||||
Stock-based compensation | 802 | 1,098 | |||||
Fixed assets | — | 102 | |||||
Goodwill | 144 | — | |||||
Intangible amortization | 61 | — | |||||
Texas margin tax temporary credit | 233 | 239 | |||||
Total deferred tax assets | 9,390 | 13,296 | |||||
Valuation allowance | (9,390 | ) | (13,192 | ) | |||
Net deferred tax assets | $ | — | $ | 104 | |||
Deferred tax liabilities: | |||||||
Goodwill | — | 230 | |||||
Intangible amortization | — | 104 | |||||
Total deferred tax liabilities | $ | — | $ | 334 | |||
Net deferred tax liability | $ | — | $ | (230 | ) |
Reporting Covenant | Required | Complies | ||||
Monthly financial statements and Compliance Certificate | Monthly within 30 days | Yes No | ||||
Annual consolidated financial statements (CPA-audited) | FYE within 180 days | Yes No | ||||
10-Q, 10-K and 8-K | Upon filing | Yes No | ||||
A/R & A/P Agings, Borrowing Base Certificate, Deferred Revenue Report | Within 5 days of the 15th and last day of each month* | Yes No | ||||
* If at any time Remaining Months Liquidity is less than six (6), also prior to each Advance | ||||||
Annual financial projections (Board-approved) | FYE within 30 days | Yes No | ||||
Reporting Covenant | Required | Actual | Complies | |||
Minimum Liquidity | *See below | $_____ | Yes No | |||
*not at any time less than (i) from the Third Amendment Date through December 31, 2018, $1,000,000, (ii) from January 1, 2019 through February 28, 2019, $700,000, and (iii) from and at all times after March 1, 2019, $600,000. | ||||||
Unrestricted Cash with Lender | *See below | $_____ | Yes No | |||
*until such time as the Non-Formula Amount is zero, an amount of not less than the sum of (i) $200,000 plus (ii) the aggregate amount of outstanding Advances under the Non-Formula Amount. | ||||||
Performance to Plan (Minimum Trailing 3-Month Revenue) | 80% of Plan | _____% of Plan | Yes No | |||
Comments Regarding Exceptions: See Attached. | BANK USE ONLY | |||||
Received By: | ||||||
Sincerely, | AUTHORIZED SIGNER | |||||
Date: | ||||||
SIGNATURE | Verified: | |||||
AUTHORIZED SIGNER | ||||||
TITLE | Date: | |||||
Compliance Status | Yes No | |||||
DATE |
1. | I have reviewed this annual report on Form 10-K of Glowpoint, Inc.; |
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. |
1. | I have reviewed this annual report on Form 10-K of Glowpoint, Inc.; |
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. |
Document and Entity Information - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Mar. 02, 2018 |
Jun. 30, 2017 |
|
Document and Entity Information | |||
Entity Registrant Name | GLOWPOINT, INC. | ||
Entity Central Index Key | 0000746210 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding (in shares) | 45,893,995 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 7,710 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Payments of debt issuance costs | $ 175 |
Payments of stock issuance costs | 45 |
Series B Preferred Stock | |
Payments of stock issuance costs | $ 520 |
Business Description and Significant Accounting Policies |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Business Description and Significant Accounting Policies | Business Description and Significant Accounting Policies Business Description Glowpoint, Inc. (“Glowpoint” or “we” or “us” or the “Company”) is a managed service provider of video collaboration and network applications. Our services are designed to provide a comprehensive suite of automated and concierge applications to simplify the user experience and expedite the adoption of video as the primary means of collaboration. Our customers include Fortune 1000 companies, along with small and medium enterprises in a variety of industries. We market our services globally through a multi-channel sales approach that includes direct sales and channel partners. The Company was formed as a Delaware corporation in May 2000. The Company operates in one segment and therefore segment information is not presented. Principles of Consolidation The consolidated financial statements include the accounts of Glowpoint and our 100%-owned subsidiary, GP Communications, LLC, whose business function is to provide interstate telecommunications services for regulatory purposes. All material inter-company balances and transactions have been eliminated in consolidation. Reclassification Certain prior year amounts have been reclassified to conform with the current year presentation. Use of Estimates Preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates made. We continually evaluate estimates used in the preparation of our consolidated financial statements for reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include determining the allowance for doubtful accounts, deferred tax valuation allowance, accrued sales taxes and regulatory fees, stock-based compensation, the valuation of goodwill, the valuation of intangible assets and their estimated lives, and the estimated lives and recoverability of property and equipment. Allowance for Doubtful Accounts We perform ongoing credit evaluations of our customers. We record an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. We also record additional allowances based on our aged receivables, which are determined based on historical experience and an assessment of the general financial conditions affecting our customer base. If our actual collections experience changes, revisions to our allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We do not obtain collateral from our customers to secure accounts receivable. The allowance for doubtful accounts was $3,000 and $32,000 at December 31, 2017 and 2016, respectively. Fair Value of Financial Instruments The Company considers its cash, accounts receivable, accounts payable and debt obligations to meet the definition of financial instruments. The carrying amount of cash, accounts receivable and accounts payable approximated their fair value due to the short maturities of these instruments. The carrying amounts of our debt obligations (see Note 9) approximate their fair values, which are based on borrowing rates that are available to the Company for loans with similar terms, collateral, and maturity. The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic 820“Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The fair value of the Super G warrant liability (see Notes 7 and 9) is considered to be Level 3 in the fair value hierarchy and was estimated using an option pricing model. Revenue Recognition Revenue billed in advance for video collaboration services is deferred until the revenue has been earned, which is when the related services have been performed. Other service revenue, including amounts passed through based on surcharges from our telecom carriers, related to the network services and collaboration services are recognized as service is provided. As the non-refundable, upfront installation and activation fees charged to our customers do not meet the criteria as a separate unit of accounting, they are deferred and recognized over the 12 to 24 month period estimated life of the customer relationship. Revenue related to professional services is recognized at the time the services are performed, and presented as required by ASC Topic 605 “Revenue Recognition”. Revenue derived from other sources are recognized when services are provided or events occur. Taxes Billed to Customers and Remitted to Taxing Authorities We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. For the years ended December 31, 2017 and 2016, we included taxes of $546,000 and $830,000, respectively, in revenue and we included taxes of $542,000 and $1,070,000, respectively, in cost of revenue. Impairment of Long-Lived Assets and Intangible Assets The Company assesses the impairment of long-lived assets used in operations, primarily fixed assets and purchased intangible assets subject to amortization when events and circumstances indicate that the carrying value of the assets might not be recoverable. For purposes of evaluating the recoverability of fixed assets, the undiscounted cash flows estimated to be generated by those assets are compared to the carrying amounts of those assets. If and when the carrying values of the assets exceed their fair values, then the related assets will be written down to fair value. Fair value of our intangible assets is determined using the relief from royalty methodology. This approach involves two steps: (a) estimating reasonable royalty rates for each intangible asset and (b) applying these royalty rates to a net revenue stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of each intangible asset. If the carrying amount of the intangible asset is greater than its implied fair value, an impairment in the amount of the excess is recognized and charged to operations. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in the Company’s strategic plan and/or other-than-temporary changes in market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. Long-lived assets are evaluated for impairment at least annually, as well as whenever an event or change in circumstances has occurred that could have a significant adverse effect on the fair value of long-lived assets (see Notes 5 and 6). Capitalized Software Costs The Company capitalizes certain costs incurred in connection with developing or obtaining internal-use software. All software development costs have been appropriately accounted for as required by ASC Topic 350-40 “Intangible – Goodwill and Other – Internal-Use Software”. Capitalized software costs are included in “Property and equipment” on our consolidated balance sheets and are amortized over three to four years. Software costs that do not meet capitalization criteria are expensed as incurred. For the year ended December 31, 2017, we capitalized internal-use software costs of $126,000 and we amortized $625,000 of these costs. For the year ended December 31, 2016, we capitalized internal-use software costs of $339,000 and we amortized $652,000 of these costs. During the years ended December 31, 2017 and 2016, we recorded impairment losses of $232,000 and $64,000, respectively, for certain discrete projects that were abandoned. These charges are recognized as “Impairment Charges” on our Consolidated Statements of Operations. Deferred Financing Costs Deferred financing costs relate to fees and expenses incurred in connection with entering into our debt agreements (see Note 9) and are amortized as interest expense over the contractual lives of the related credit facilities. As of December 31, 2017 and 2016, unamortized deferred financing costs of $138,000 and $125,000, respectively, are included as a direct reduction of the carrying amount of our debt. Concentration of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, and trade accounts receivable. We place our cash primarily in commercial checking accounts. Commercial bank balances may from time to time exceed federal insurance limits. Property and Equipment Property and equipment are stated at cost and are depreciated over the estimated useful lives of the related assets, which range from three to five years. Leasehold improvements are amortized over the shorter of either the asset’s useful life or the related lease term. Depreciation is computed on the straight-line method for financial reporting purposes. Income Taxes We use the asset and liability method to determine our income tax expense or benefit. Deferred tax assets and liabilities are computed based on temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that are expected to be in effect when the differences are expected to be recovered or settled. Any resulting net deferred tax assets are evaluated for recoverability and, accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized. Stock-based Compensation Stock-based awards have been accounted for as required by ASC Topic 718 “Compensation – Stock Compensation” (“ASC Topic 718”). Under ASC Topic 718 stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. Research and Development Research and development expenses include internal and external costs related to developing new service offerings and features and enhancements to our existing services. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ASU 2014-09, “Revenue from Contracts with Customers.” The ASU relates to new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Subsequently, the FASB has issued amendments to certain aspects of the guidance including the effective date. The Company will adopt the guidance in the first quarter of 2018 using the modified-retrospective method. Based on the reviews and assessments performed to date, the Company expects the pattern of revenue recognition for substantially all of its businesses to be unchanged, and that upon adoption revenue will generally continue to be recognized at a single point in time when control is transferred to the customer. The Company anticipates an immaterial impact to retained earnings upon adoption, as well as an immaterial balance sheet impact related to the classification of amounts associated with sales returns reserves. In February 2016 the FASB issued ASU 2016-02, “Leases”. The ASU introduces a lessee model that results in most leases impacting the balance sheet. The ASU addresses other concerns related to the current leases model. Under ASU 2016-02, lessees will be required to recognize for all leases with terms longer than 12 months, at the commencement date of the lease, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. While we continue to evaluate the effect of adopting this guidance on our consolidated financial statements and related disclosures, we expect our operating leases, as disclosed in Note 13, will be subject to the new standard. We will recognize right-of-use assets and operating lease liabilities on our balance sheet upon adoption, which will increase our total assets and liabilities. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments” (Subtopic 230). This guidance clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The amendment addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. These updates are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. The guidance should be applied retrospectively unless it is impractical to do so; in which case, the guidance should be applied prospectively as of the earliest date practicable. Management does not expect the adoption of ASU 2016-15 to have a material impact on our financial statements. |
Liquidity |
12 Months Ended |
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Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Liquidity | Liquidity As of December 31, 2017, we had $3,946,000 of cash and working capital of $3,088,000. For the years ended December 31, 2017 and 2016, we generated net income of $5,785,000 and a net loss of $3,533,000, respectively, and net cash provided by operating activities of $1,609,000 and $183,000, respectively. For the year ended December 31, 2016, we generated cash flow from operations even though we incurred a net loss as our net loss included certain non-cash expenses that are added back to our cash flow from operations (as shown on our consolidated statements of cash flows). A substantial portion of our cash flow from operations during 2017 and 2016 was dedicated to the payment of interest on our then-existing indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and investments in sales and marketing. During the years ended December 31, 2017 and 2016, our cash flow from operations was reduced by $878,000 and $1,116,000, respectively, for interest payments on our then-existing indebtedness. During the period from July 31, 2017 through January 26, 2018, the Company completed a series of transactions (each of which is described further in Notes 9, 10 and 19 below, as applicable) that improved our financial position and liquidity. We reduced our outstanding debt obligations from $11.5 million as of June 30, 2017 to $0.6 million as of January 31, 2018, while increasing our cash position from $1.1 million as of June 30, 2017 to $3.6 million as of January 31, 2018. The following is a summary of these transactions (and, where noted below, includes events subsequent to our fiscal year ending December 31, 2017): •On July 31, 2017, the Company completed a recapitalization of its debt obligations which reduced debt and accrued interest obligations by $9,362,000. •On October 24, 2017, the Company closed a registered direct offering of 2,800 shares of our 0% Series B Convertible Preferred Stock (the “Series B Preferred Stock”) for net proceeds of $2,280,000 (the “Series B Offering”). •On January 2, 2018, the Company made a $200,000 principal payment on the Western Alliance Bank Loan Agreement (the “Western Alliance Bank Loan Payment”). •On January 25, 2018, the Company closed a registered direct offering of 1,750 shares of our 0% Series C Convertible Preferred Stock (the “Series C Preferred Stock”) for net proceeds of $1,531,000 (the “Series C Offering”). •On January 26, 2018, the Company terminated the Business Loan and Security Agreement, dated July 31, 2017, by and between the Company and Super G Capital LLC (“Super G”), along with the accompanying Warrant to Purchase Shares of Common Stock, dated July 31, 2017, and paid off all remaining debt obligations with Super G (“the Super G Payoff”). Our capital requirements continue to depend on numerous factors, including the timing and amount of revenue, the expense to deliver our services, expense for sales and marketing, expense for research and development, capital improvements, and the cost involved in protecting our intellectual property rights. The Company believes that, based on our current projection of revenue, expenses, capital expenditures and cash flows, it will have sufficient resources and cash flows to service its debt obligations and fund its operations for at least the next twelve months following the filing of this Report. However, there is no assurance the Company will be able to accomplish this during this period or in the future following such period. The Company anticipates reduced cash flow from operations and increased levels of capital expenditures, and we believe additional capital may be required to fund investments in product development and sales and marketing as a means to reverse our revenue trends. While we expect to continue to adjust our cost of revenue and other operating expenses to partially offset the impact of revenue declines associated with our legacy services, we believe additional capital may be necessary to fund our obligations. In the event we need access to capital to fund operations or provide growth capital, we would likely need to raise capital in one or more equity offerings. There can be no assurance that we will be successful in raising necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital that may be needed on terms acceptable to us, it could have a material adverse effect on the Company. Failure to obtain financing, or obtaining financing on unfavorable terms, could result in a decrease in our stock price, would have a material adverse effect on future operating prospects, and could require us to significantly reduce operations. |
Prepaid Expenses and Other Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands):
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Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands):
(*) – Amortized over the shorter period of the estimated useful life (five years) or the lease term. Related depreciation and amortization expense was $938,000 and $1,090,000 for the years ended December 31, 2017 and 2016, respectively. For the years ended December 31, 2017 and 2016, the Company recorded asset impairment charges on property and equipment of $238,000 and $76,000, of which $232,000 and $64,000 pertained to capitalized software, respectively. The remaining impairments primarily consisted of furniture, network equipment, and leasehold improvements no longer being utilized in the Company’s business. These charges are recognized as “Impairment Charges” on our Consolidated Statements of Operations. |
Goodwill |
12 Months Ended |
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Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Goodwill is not amortized but is subject to periodic testing for impairment in accordance with ASC Topic 350 “Intangibles - Goodwill and Other - Testing Indefinite-Lived Intangible Assets for Impairment” (“ASC Topic 350”). We test goodwill for impairment on an annual basis on September 30 of each year or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company operates as a single reporting unit. The Company uses market-based approaches to determine the fair value of the reporting unit. These approaches use quoted market prices in active markets and revenue multiples for comparable companies. The Company adopted Accounting Standards Update (“ASU”) 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” effective September 30, 2017 which has eliminated Step 2 from the goodwill impairment test. Under this update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. As of September 30, 2017, the carrying amount of our reporting unit exceeded its fair value; therefore, the Company recorded a goodwill impairment charge of $1,475,000 in the year ended December 31, 2017. The Company recorded a goodwill impairment charge of $600,000 in the year ended December 31, 2016. These charges are recognized as “Impairment Charges” on our Consolidated Statements of Operations. The remaining goodwill balance as of December 31, 2017 was $7,750,000. The continued future decline of our revenue, cash flows and/or stock price may give rise to a triggering event that may require the Company to record additional impairment charges on goodwill in the future. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible assets consisted of the following (in thousands):
The Company assesses the impairment of purchased intangible assets subject to amortization when events and circumstances indicate that the carrying value of the assets might not be recoverable. The Company performed its evaluation of intangible assets as of September 30, 2017 and determined that the fair value of the long-lived assets exceeded the carrying value, therefore no impairment charges were required for the year ended December 31, 2017. Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from five years to twelve years in accordance with ASC Topic 350. Accumulated amortization as of December 31, 2017 consisted of $4,335,000 for customer relationships, $528,000 for affiliate network and $388,000 for trademarks. Related amortization expense was $683,000 and $869,000 for the years ended December 31, 2017 and 2016, respectively. Amortization expense for each of the next five succeeding years will be as follows (in thousands):
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Accrued Expenses and Other Liabilities |
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Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands):
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Accrued Sales Taxes and Regulatory Fees |
12 Months Ended |
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Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Sales Taxes and Regulatory Fees | Accrued Sales Taxes and Regulatory Fees Included in accrued sales taxes and regulatory fees are certain estimated sales and use taxes and regulatory fees and sales taxes and regulatory fees collected from customers that are to be remitted to taxing authorities. Actual payments may vary from our estimates. Accrued sales taxes and regulatory fees as of December 31, 2017 and 2016 were $259,000 and $395,000, respectively. |
Debt |
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Debt | Debt Debt consisted of the following (in thousands):
On July 31, 2017, the Company completed a recapitalization of its debt obligations as described further below (the “Debt Recapitalization”). In summary, the Debt Recapitalization resulted in: (i) the aggregate elimination of $11,562,000 of total debt and accrued interest obligations owed by the Company to Main Street Capital Corporation (“Main Street”) and Shareholder Representative Services LLC (“SRS”) and outstanding as of July 31, 2017, (ii) aggregate gross proceeds of $2,200,000 from new debt obligations of the Company with Western Alliance Bank and Super G Capital LLC (“Super G”) as of July 31, 2017, which proceeds were used to fund the Main Street Payoff (defined below), (iii) use of $350,000 of the Company’s cash and (iv) the reduction of outstanding shares of the Company’s common stock by a net amount of 404,587 shares. Therefore, as of July 31, 2017, there were no remaining obligations related to the Main Street Term Loan or SRS Note (each as defined below). The Company recorded a gain on debt extinguishment of $9,045,000 (which was net of the write off of $89,000 of unamortized debt discounts) during the year ended December 31, 2017 in connection with the Debt Recapitalization. The Company recorded the net 404,587 shares of common stock purchased to treasury stock in the net amount of $121,376 (equal to the stock price of $0.30 per share as of July 31, 2017). Main Street Payoff Letter and Redemption Agreement As of July 31, 2017, the Company had outstanding borrowings of $9,000,000 under a senior secured term loan facility (the “Main Street Term Loan”) with Main Street. Borrowings under the Main Street Term Loan were to mature on October 17, 2018 unless sooner terminated as provided in the loan agreement governing the Main Street Term Loan (the “Main Street Loan Agreement”). As of June 30, 2017, the Company was in default of certain covenants in the Main Street Loan Agreement. The interest rate on borrowings under the Main Street Term Loan was 12% per annum and interest payments were due monthly. As of July 31, 2017, Main Street owned 7,711,517 shares, or 21%, of the Company’s outstanding common stock. On July 31, 2017, the Company and Main Street entered into (i) a payoff letter (the “Main Street Payoff Letter”) that terminated the $9,000,000 Main Street Term Loan and (ii) a Redemption Agreement (“the Main Street Redemption Agreement”) whereby the Company purchased the 7,711,517 shares of the Company’s common stock held by Main Street, in exchange for total cash payments from the Company of $2,550,000 (together the “Main Street Payoff”). On July 31, 2017, the Company funded the Main Street Payoff using $350,000 of the Company’s existing cash plus cash proceeds of $2,200,000 borrowed under loan agreements with Western Alliance Bank and Super G. The Company recorded the purchase of 7,711,517 shares of the Company’s common stock to treasury stock in the amount of $2,313,000 (equal to the stock price of $0.30 per share as of July 31, 2017) and recorded the $237,000 remaining amount of the Main Street Payoff as a principal repayment. SRS Note Exchange Agreement As of July 31, 2017, the Company had outstanding total obligations of $2,562,000 (consisting of $1,785,000 of principal and $777,000 of accrued interest) under a promissory note (the “SRS Note”) that the Company issued to SRS in connection with the 2012 acquisition of Affinity VideoNet, Inc. (“Affinity”), which was amended in February 2015. The maturity date of the SRS Note was July 6, 2017 and the interest rate on the SRS Note was 15% per annum. Payment of all interest earned after March 1, 2015 was also due on July 6, 2017. In June 2017, SRS granted the Company a waiver of the final installment for 60 days. The SRS Note was subordinate to borrowings under the Main Street Loan Agreement, and was only permitted to be repaid if permitted by the terms of the Main Street Loan Agreement. On July 31, 2017, the Company and SRS entered into a Note Exchange Agreement (the “SRS Note Exchange Agreement’) to extinguish the $2,562,000 of obligations on the SRS Note in exchange for 7,306,930 shares of the Company’s common stock (the “SRS Note Exchange”). The Company recorded the issuance of 7,306,930 shares of the Company’s common stock from treasury stock in the amount of $2,192,000 (equal to the stock price of $0.30 per share as of July 31, 2017). Western Alliance Bank Business Financing Agreement On July 31, 2017, the Company and its subsidiary entered into a Business Financing Agreement with Western Alliance Bank, as lender (the “Western Alliance Bank Loan Agreement”). The Western Alliance Bank Loan Agreement provides the Company with up to a total of $1,500,000 of revolving loans (the “A/R Revolver”). The maximum amount available under the A/R Revolver is limited to the lesser of (x) $1,500,000 and (y) an amount equal to the borrowing base. The borrowing base includes 85% of the Company’s eligible accounts receivable plus a non-formula amount (which was $600,000 at closing, and which stepped down to $400,000 on October 1, 2017 and, to $200,000 on January 2, 2018, and steps down to $0 on April 1, 2018) (“the Non-Formula Amount”). On July 31, 2017, the Company received a loan in an amount equal to $1,100,000 under the Western Alliance Bank Loan Agreement, consisting of $500,000 based on 85% of eligible accounts receivable and $600,000 of Non-Formula Amount, the proceeds of which were used to fund the Main Street Payoff. During the year ended December 31, 2017, the Company made payments of $100,000 on the A/R Revolver and $200,000 on the Non-Formula Amount. All loans under the A/R Revolver mature on July 31, 2019 (unless such loans are not supported by the borrowing base, in which case any loans exceeding the borrowing base must be immediately repaid). Given the step-down of the Non-Formula Amount as described above, the Company made a principal payment of $200,000 on January 2, 2018 and will be required to make the final mandatory $200,000 prepayment on April 1, 2018. The Western Alliance Bank Loan Agreement provides that all borrowings bear interest at the prime rate (4.50% as of December 31, 2017) plus 1.75% (or a total of 6.25% as of December 31, 2017) per year. The prime rate is subject to a floor of 4.00%. Interest payments on the outstanding borrowings are due monthly. The Company may receive new borrowings on the A/R Revolver if supported by the borrowing base and may prepay borrowings under the Western Alliance Bank Loan Agreement at any time without premium or penalty, subject to certain notice requirements. As of December 31, 2017, the total borrowings on the A/R Revolver were $800,000 (including $400,000 on the Non-Formula Amount) and we had additional availability of $200,000. The obligations of the Company under the Western Alliance Bank Loan Agreement are secured by substantially all of the assets of the Company and its subsidiary, including accounts receivable, intellectual property, equipment and other personal property. The Western Alliance Bank Loan Agreement contains certain restrictions and covenants, which, among other things, subject to certain exceptions, restrict the Company’s ability to incur additional debt, guarantee debt, sell assets, make certain investments in, or loans to, third parties, make distributions or grant or permit the creation of any liens or other encumbrances on collateral. The Western Alliance Bank Loan Agreement also requires that we comply with certain financial covenants, including maintaining a specified asset coverage ratio, minimum levels of adjusted EBITDA, maximum levels of capital expenditures, minimum revenues, and minimum amounts of unrestricted cash held with Western Alliance Bank. As of December 31, 2017, the Company was in compliance with all required covenants. On March 5, 2018, the Western Alliance Bank Loan Agreement was amended to, among other things, (i) remove financial covenants related to minimum levels of adjusted EBITDA and asset coverage ratios, (ii) increase maximum levels of capital expenditures, and (iii) add a covenant related to maintaining a minimum level of liquidity. This amendment also provides that, effective March 5, 2018, all borrowings bear interest at the prime rate (4.50% as of March 5, 2018) plus 2.25% (or a total of 6.75% as of March 5, 2018) per year. The Western Alliance Bank Loan Agreement contains customary events of default, including failure to pay any principal or interest when due, failure to perform or observe covenants, breaches of representations and warranties, certain cross defaults, certain bankruptcy related events, monetary judgments defaults and a change in control. Upon the occurrence of an event of default, the outstanding obligations may be accelerated and become immediately due and payable. Super G Loan Agreement and Warrant On July 31, 2017, the Company and its subsidiary entered into a Business Loan and Security Agreement with Super G, as lender (the “Super G Loan Agreement”), and received a term loan from Super G in an amount equal to $1,100,000, the proceeds of which were used to fund the Main Street Payoff (the “Super G Loan”). Borrowings under the Super G Loan Agreement were to be repaid in installments (including interest) of $33,000 per month in the first 3 months following closing and $68,600 per month in months four through twenty-four following closing, for total payments of $1,540,000. The effective interest rate of the Super G Loan is approximately 33%. During the year ended December 31, 2017, the Company made total principal and interest payments of $68,000 and $134,000, respectively, on the Super G Loan. The remaining principal balance as of December 31, 2017 was $1,032,000. On July 31, 2017, the Company also issued a warrant that entitled Super G to purchase 550,000 shares of the Company’s common stock at an exercise price of $0.30 per share (the “Super G Warrant”). The Super G Warrant had a three year term and provided that if the profit on such warrants was not equal to at least $165,000 over the term of the warrants, then at the end of the three year term, the Company would pay an exit fee equal to the difference between $165,000 and the amount of profit recognized. As of December 31, 2017, no warrants were exercised. The $165,000 fair value of this warrant has been recorded as a derivative liability in “Accrued Expenses and Other Liabilities” on our Consolidated Balance Sheet as of December 31, 2017. The derivative was originally recorded as a discount to the carrying amount of the debt as of December 31, 2017. The warrant liability is revalued on each balance sheet date until such instrument is exercised or expires, with any changes in the fair value between reporting periods recorded as other income or expense. The Company estimates the fair value of this liability using an option pricing model. During 2017 there was no change to the fair value of the warrant liability. On January 26, 2018, the Company and Super G entered into a payoff letter that terminated the Super G Loan Agreement and the Super G Warrant, dated July 31, 2017, by and between the Company and the lender, in exchange for total cash payments from the Company of $1,269,000 (the “Super G Payoff”). The Company funded the Super G Payoff with the net proceeds of its Series C Offering (described further below in Note 19). In connection with the Super G Payoff, the related warrant liability and corresponding debt discount were eliminated in January 2018. The total debt discount on the Western Alliance Bank A/R Revolver and Super G Loan was for $339,000. This debt discount is being amortized to interest expense using the effective interest method over the term of the debt. During the year ended December 31, 2017 the Company amortized $70,000 of the debt discount to interest expense. The unamortized debt discount as of December 31, 2017 is $269,000. During the year ended December 31, 2017 total amortization of the debt discounts related to the Main Street Term Loan and SRS Note were $36,000, respectively, which is recorded in “Interest and Other Expense, Net” on our Consolidated Statements of Operations. Future maturities of debt were estimated as follows as of December 31, 2017 (not considering the Super G Payoff described above) (in thousands):
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Preferred Stock |
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Dec. 31, 2017 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Preferred Stock | Preferred Stock Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock. As of December 31, 2017, there were: (i) 100 shares of Perpetual Series B-1 Preferred Stock authorized and no shares issued or outstanding; (ii) 7,500 shares of Series A-2 Convertible Preferred Stock authorized and 32 shares issued and outstanding(the “Series A-2 Preferred Stock”); (iii) 2,800 shares of Series B Preferred Stock authorized and 450 shares issued and outstanding; (iv) 4,000 shares of Series D Convertible Preferred Stock authorized and no shares issued or outstanding; and (v) 100 shares of Perpetual Series B Preferred Stock authorized and no shares issued or outstanding. Each share of Series A-2 Preferred Stock has a stated value of $7,500 per share (the “A-2 Stated Value”), a liquidation preference equal to the Series A-2 Stated Value, and is convertible at the holder’s election into common stock at a conversion price per share of $2.40 as of December 31, 2017. Therefore, each share of Series A-2 Preferred Stock is convertible into 3,128 shares of common stock as of December 31, 2017. The conversion price is subject to adjustment upon the occurrence of certain events set forth in our Certificate of Incorporation. During the year ended December 31, 2017, the Series B Offering resulted in an adjustment to the Series A-2 Preferred Stock conversion price from $2.98 to $2.40, resulting in a beneficial conversion amount of $58,000 which has been recorded in additional paid-in capital. In January 2018, the Series C Offering (described further below in Note 19) resulted in an adjustment to the Series A-2 Preferred Stock conversion price from $2.40 to $2.16, resulting in a beneficial conversion amount of $24,000 which will be recorded in additional paid-in capital. The Series A-2 Preferred Stock is subordinate to the Series B-1 Preferred Stock but senior to all other classes of equity, has weighted average anti-dilution protection and, effective January 1, 2013, entitled to cumulative dividends at a rate of 5% per annum, payable quarterly, based on the Series A-2 Stated Value. Once dividend payments commence, all dividends are payable at the option of the holder in cash or through the issuance of a number of additional shares of Series A-2 Preferred Stock with an aggregate liquidation preference equal to the dividend amount payable on the applicable dividend payment date. As of December 31, 2017 and 2016, the Company has recorded $59,000 and $47,000, respectively, in accrued dividends on the accompanying Consolidated Balance Sheets related to the Series A-2 Preferred Stock. Series B Offering In October 2017 pursuant to the Series B Offering, the Company closed a registered direct offering of 2,800 shares of its Series B Preferred Stock for total gross proceeds to the Company of $2,800,000. The shares of Series B Preferred Stock were sold at a price equal to their stated value of $1,000 per share and are convertible into shares of the Company’s common stock at a conversion price of $0.28 per share. The net proceeds to us from the sale of our securities in this offering were $2,280,000 after deducting offering expenses paid by us. During the year ended December 31, 2017, 2,350 shares of Series B Preferred Stock were converted to 8,392,857 shares of the Company’s common stock. As of December 31, 2017, 450 shares of Series B Preferred Stock remain issued and outstanding. During February 2018, 50 shares of Series B Preferred Stock were converted to 178,571 shares of the Company’s common stock. As of the filing of this Report, 400 shares of Series B Preferred Stock remain issued and outstanding. The Company has agreed to provide the Purchasers a right of participation for up to 100% of any future offering of its common stock or other securities or equity linked debt obligations for 24 months following the closing date. In addition, the Company agreed to expand the size of the Company’s board of directors to six members and to appoint a new independent director agreeable to the lead investor in the offering (the “Lead Investor”). Subject to limited exceptions, for as long as at least 333 shares of Series B Preferred Stock remain outstanding and unconverted (subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations and subdivisions or similar events occurring after the date of the Purchase Agreement with respect to the Series B Preferred Stock), the Company may not issue any common stock or convertible securities (or modify any of the foregoing that may be outstanding) to any person, or incur any debt, without the express written consent of the Lead Investor. In addition, the Company has agreed that it will not enter into certain “fundamental transactions,” including transactions constituting a change of control of the Company, certain reorganization transactions or a sale of all or substantially all of the Company’s assets, except as pursuant to written agreements in form and substance satisfactory to the holders of a majority of the outstanding shares of Series B Preferred Stock including the Lead Investor and on terms with respect to the Series B Preferred Stock as set forth in the Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of the Series B Preferred Stock. In accordance with ASC Topic 815, we evaluated whether our convertible preferred stock contains provisions that protect holders from declines in our stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective preferred stock agreements based on a variable that is not an input to the fair value of a “fixed-for-fixed” option and require a derivative liability. The Company determined no derivative liability is required under ASC Topic 815 with respect to our convertible preferred stock. A contingent beneficial conversion amount is required to be calculated and recognized when and if the adjusted $2.16 conversion price of the Series A-2 Preferred Stock is adjusted to reflect a down round stock issuance that reduces the conversion price below the $1.16 fair value of the common stock on the issuance date of the Series A-2 Preferred Stock. |
Stock Based Compensation |
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Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation | Stock Based Compensation Glowpoint 2014 Stock Incentive Plan On May 28, 2014, the Glowpoint, Inc. 2014 Equity Incentive Plan (the “2014 Plan”) was approved by the Company’s stockholders at the Company’s 2014 Annual Meeting of Stockholders. The purpose of the 2014 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means to attract, motivate, retain and reward selected employees and other eligible persons through the grant of equity awards. Awards may be granted under the 2014 Plan to officers, employees, directors and consultants of the Company or its subsidiaries. The 2014 Plan permits the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, cash awards and other awards, including stock bonuses, performance stock, performance units, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to the Company’s common stock, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof, or any similar securities with a value derived from the value of or related to the Company’s common stock and/or returns thereon. A total of 4,400,000 shares of the Company’s common stock were initially available for issuance under the 2014 Plan. During the year ended December 31, 2017, no awards were granted under the 2014 Plan. As of December 31, 2017, 1,368,000 shares are available for issuance under the 2014 Plan. Glowpoint 2007 Stock Incentive Plan In May 2014, the Board terminated the Company’s 2007 Stock Incentive Plan (the “2007 Plan”). Notwithstanding the termination of the 2007 Plan, outstanding awards under the 2007 Plan will remain in effect accordance with their terms. As of December 31, 2017, options to purchase a total of 1,202,000 shares of common stock and 171,000 shares of restricted stock were outstanding under the 2007 Plan. Glowpoint 2000 Stock Incentive Plan In June 2010, the Board terminated the Glowpoint 2000 Stock Incentive Plan (as amended, the “2000 Plan”). Notwithstanding the termination of the 2000 Plan, outstanding awards under the 2000 Plan will remain in effect accordance with their terms. As of December 31, 2017, options to purchase a total of 500 shares of common stock were outstanding under the 2000 Plan. Stock Options For the years ended December 31, 2017 and 2016, no stock options were granted; therefore, no fair value assumptions are presented herein for the years ended December 31, 2017 and 2016. A summary of stock options expired and forfeited under our plans and options outstanding as of, and changes made during, the years ended December 31, 2017 and 2016 is presented below (options in thousands):
Additional information as of December 31, 2017 is as follows (options in thousands):
Stock-based compensation expense relating to stock option awards was $18,000 and $361,000 for the years ended December 31, 2017 and 2016, respectively and was recorded in general and administrative expenses. The intrinsic value of vested options, unvested options and exercised options were not significant for all periods presented. There was no remaining unrecognized stock-based compensation expense for options at December 31, 2017 as all options were vested. Restricted Stock Awards A summary of restricted stock granted, vested, forfeited and unvested outstanding as of, and changes made during, the years ended December 31, 2017 and 2016, is presented below (shares in thousands):
The number of restricted stock awards vested during the year ended December 31, 2017 includes 3,200 shares withheld and repurchased by the Company on behalf of employees to satisfy $1,000 of tax obligations relating to the vesting of such shares. Such shares are held in the Company’s treasury stock as of December 31, 2017. Stock-based compensation expense relating to restricted stock awards is allocated as follows (in thousands):
During the year ended December 31, 2016, the Company recorded $93,000 in stock-based compensation expense related to 170,000 shares of restricted stock awards issued during 2016. Certain restricted stock awards have performance-based vesting provisions and are subject to forfeiture, in whole or in part, if these performance conditions are not achieved. Management assesses, on an ongoing basis, the probability of whether the performance criteria will be achieved and, once it is deemed probable, stock-based compensation expense is recognized over the relevant performance period. For those awards not subject to performance criteria, the cost of the restricted stock awards is expensed, which is determined to be the fair market value of the shares at the date of grant, on a straight-line basis over the vesting period. The remaining unrecognized stock-based compensation expense for restricted stock awards at December 31, 2017 was $155,000. Of this amount, $18,000 relates to time-based awards with a remaining weighted average period of 8 months. The remaining $137,000 of unrecognized stock-based compensation expense relates to performance-based awards for which expense will be recognized upon the Company achieving defined AEBITDA targets. Restricted Stock Units A summary of restricted stock units (“RSUs”) granted, vested, forfeited and unvested outstanding as of, and changes made during, the years ended December 31, 2017 and 2016, is presented below (shares in thousands):
As of December 31, 2017, 988,000 vested RSUs remain outstanding as shares of common stock have not yet been delivered for these units in accordance with the terms of the RSUs. As of December 31, 2017, there were 1,108,000 unvested RSUs that have performance-based vesting provisions and are subject to forfeiture, in whole or in part, if these performance conditions are not achieved. Management assesses, on an ongoing basis, the probability of whether the performance criteria will be achieved and, once it is deemed probable, stock-based compensation expense is recognized over the relevant performance period. As of December 31, 2017, there were 644,000 unvested RSUs that have timed-based vesting provisions, and the cost of the RSUs is expensed, which is determined to be the fair market value of the shares at the date of grant, on a straight-line basis over the vesting period. Stock-based compensation expense relating to restricted stock units is allocated as follows (in thousands):
The remaining unrecognized stock-based compensation expense for restricted stock units at December 31, 2017 was $467,000. Of this amount, $164,000 relates to time-based awards with a remaining weighted average period of 4 months. The remaining $303,000 of unrecognized stock based compensation expense relates to performance-based awards for which expense will be recognized upon the Company achieving defined revenue and AEBITDA targets over fiscal years 2017 through 2019. There was no tax benefit recognized for stock-based compensation expense for the years ended December 31, 2017 and 2016. No compensation costs were capitalized as part of the cost of an asset during the periods presented. |
Net Income (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The weighted-average number of shares of common stock outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding at December 31, 2017 and 2016, are considered contingently returnable until the restrictions lapse and will not be included in the basic net income (loss) per share calculation until the shares are vested. Unvested shares of our restricted stock do not contain non-forfeitable rights to dividends and dividend equivalents. Vested RSUs (for which shares of common stock have not yet been delivered) are included in the calculations of basic net income (loss) per share. Unvested RSUs are not included in calculations of basic net income (loss) per share, as they are not considered issued and outstanding at time of grant. Diluted net income (loss) per share is computed by giving effect to all potential shares of common stock, including stock options, preferred stock, RSUs, and unvested restricted stock awards, to the extent they are dilutive. For the year ended December 31, 2016, all such common stock equivalents have been excluded from diluted net loss per share as the effect to net loss per share would be anti-dilutive (decrease our net loss per share). The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except per share data):
The following table represents the potential shares that were excluded from the computation of weighted-average number of shares of common stock in computing the diluted net income (loss) per share for the periods presented because including them would have had an anti-dilutive effect (in thousands):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases We lease two facilities in Denver, CO and Oxnard, CA that are under operating leases through December 2018 and March 2020, respectively. Both of these leases require us to pay increases in real estate taxes, operating costs and repairs over certain base year amounts. Lease payments for the years ended December 31, 2017 and 2016 were $279,000 and $287,000, respectively. Future minimum rental commitments under all non-cancelable operating leases are as follows (in thousands):
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Risks and Uncertainties [Abstract] | |
Major Customers | Major Customers Major customers are defined as direct customers or channel partners that account for more than 10% of the Company’s revenues. For the year ended December 31, 2017, two major customers accounted for 23% and 16%, respectively, of our total revenue, and accounted for 65% and 1%, respectively, of our outstanding accounts receivable as of December 31, 2017. For the year ended December 31, 2016, two major customers accounted for 16% and 12%, respectively, of our total revenue. In January 2017, our largest customer filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code. This customer paid us in full for our services throughout 2017 and emerged from Chapter 11 in December 2017. The loss of or a reduction in sales or anticipated sales to our most significant or several of our smaller customers could have a material adverse effect on our business, financial condition and results of operations. |
Geographical Data |
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Geographical Data | Geographical Data For the years ended December 31, 2017 and 2016, there was no material revenue attributable to any individual foreign country. Approximately 1% of foreign revenue is billed in foreign currency and foreign currency gains and losses are not material. Revenue by geographic area is allocated as follows (in thousands):
Long-lived assets were 100% located in domestic markets during both years ended December 31, 2017 and 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The following table sets forth income before taxes and the income tax (benefit) expense (in thousands):
Our effective tax rate differs from the statutory federal tax rate as shown in the following table (in thousands):
The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities is presented below (in thousands):
The ending balances of the deferred tax asset have been fully reserved, reflecting the uncertainties as to realizability evidenced by the Company’s historical results. The change in valuation allowance for the year ended December 31, 2017 is a decrease of $3,802,000. We and our subsidiary file federal and state tax returns on a consolidated basis. During 2013, we determined that an “ownership change” had occurred in 2013 (as defined under Section 382 of the Internal Revenue Code of 1986, as amended) which places an annual limitation on the utilization of the net operating loss (“NOL”) carryforwards accumulated before the ownership change. As a result of this annual limitation and the limited carryforward life of the accumulated NOLs, we determined that the ownership change resulted in the permanent loss of $1.9 million of tax benefit associated with the NOL carryforwards. If additional ownership changes occur in the future, the use of the NOL carryforwards could be subject to further limitation. At December 31, 2017, we had federal NOL carryforwards of $32,226,000 available to offset future federal taxable income which expire in various amounts from 2018 through 2036. The Company also has various state NOL carryforwards. The determination of the state NOL carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, which significantly changes the existing U.S. tax laws, including a reduction in the corporate tax rate from 35% to 21%, a move from a worldwide tax system to a semi-territorial system, a change in the treatment of operating loss carryforwards generated subsequent to 2017 fiscal year as well as other changes. As a result of enactment of the legislation, the Company recorded a one-time change to its deferred tax assets and related valuation allowance. As the Company has a full valuation allowance such change did not impact the Company’s results of operations or financial position. There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC Topic 740 “Income Taxes” (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s consolidated financial statements for the years ended December 31, 2017 and 2016. The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months. Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2017 and 2016. The federal and state tax returns for the years ending December 31, 2016, 2015 and 2014 are currently open and the tax return for the year ended December 31, 2017 will be filed by September 2018. |
401(k) Plan |
12 Months Ended |
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Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
401(k) Plan | 401(k) Plan We have adopted a retirement plan under Section 401(k) of the Internal Revenue Code. The 401(k) plan covers substantially all employees who meet minimum age and service requirements. Company contributions to the 401(k) plan for the years ended December 31, 2017 and 2016 were $69,000 and $82,000, respectively. |
Related Party Transactions |
12 Months Ended |
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Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company purchased technology consulting services during 2016 from Nectar Services Corporation, (“Nectar”). David Giangano, who serves on the Board of Directors for the Company, is an officer of Nectar. No fees were paid to Nectar during the year ended December 31, 2017. Related party consulting fees of $11,000 were paid to Nectar during the year ended December 31, 2016. There were no outstanding payables due to Nectar as of December 31, 2017. As of July 31, 2017, Peter Holst, the Company’s President and CEO and a prior stockholder of Affinity, held a 27.3% interest in the SRS Note, which was issued to SRS on behalf of the prior stockholders of Affinity in October 2012. See Note 9 for a description of the terms of the SRS Note and a discussion of the Debt Recapitalization. As of July 31, 2017, there were no remaining obligations related to the SRS Note. Our President, Chief Executive Officer, and Director, Peter Holst, held a 27.3% interest in the SRS Note (or $699,528 as of July 31, 2017 including accrued interest) and received 1,806,087 shares of the Company’s common stock in connection with the SRS Note Exchange (representing an effective exchange price into common stock of $0.387 per share). The SRS Note Exchange was negotiated and approved on behalf of the Company by a special committee of the board of directors consisting exclusively of independent, disinterested directors. As of July 31, 2017, Main Street owned 7,711,517 shares, or 21%, of the Company’s outstanding common stock. Main Street was the Company’s senior debt lender (see Note 9). On July 31, 2017, the Company purchased the 7,711,517 shares of common stock from Main Street. See Note 9 for a discussion of the Debt Recapitalization. |
Subsequent Events |
12 Months Ended |
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Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Series C Offering On January 25, 2018, the Company closed a registered direct offering of 1,750 shares of its Series C Preferred Stock for total gross proceeds to the Company of $1,750,000. The shares of Series C Preferred Stock were sold at a price equal to their stated value of $1,000 per share and are convertible into shares of the Company’s common stock at a conversion price of $0.30 per share. The net proceeds to us from the sale of our securities in this offering were $1,531,000 after deducting offering expenses paid by us (the “Series C Offering”). The Company funded the Super G Payoff with the net proceeds of its Series C Offering (described further above in Note 9). The Company has agreed to provide the purchasers, during the period that the purchasers continue to hold Series C Preferred Stock, a right of participation for up to 100% of any future offering of its common stock or other securities or equity linked debt obligations for up to 24 months following the closing date. Subject to limited exceptions, for as long as at least $500,000 of stated value of Series C Preferred Stock remain outstanding and unconverted (subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations and subdivisions or similar events occurring after the date of the Purchase Agreement with respect to the Series C Preferred Stock), the Company shall not issue any common stock or convertible securities (or modify any of the foregoing that may be outstanding) to any person at a price per share less than $0.30, or incur any debt, without the express written consent of the Lead Investor. In addition, the Company has agreed that it will not enter into certain “fundamental transactions,” including transactions constituting a change of control of the Company, certain reorganization transactions or a sale of all or substantially all of the Company’s assets, except as pursuant to written agreements in form and substance satisfactory to the holders of a majority of the outstanding shares of Series C Preferred Stock including the Lead Investor and on terms with respect to the Series C Preferred Stock as set forth in the Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of the Series C Preferred Stock. On January 26, 2018, the Company and Super G entered into a payoff letter that terminated the Super G Loan Agreement and the Super G Warrant, dated July 31, 2017, by and between the Company and the lender, in exchange for total cash payments from the Company of $1,269,000 (the “Super G Payoff”) (see Note 9). The Company funded the Super G Payoff with the net proceeds of its Series C Offering. During February 2018, 325 shares of Series C Preferred Stock were converted to 1,083,333 shares of the Company’s common stock and 50 shares of Series B Preferred Stock were converted to 178,571 shares of the Company’s common stock. As of the filing of this Report, 1,425 shares of Series C Preferred Stock remain issued and outstanding and 400 shares of Series B Preferred Stock remain issued and outstanding. |
Business Description and Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||||||
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Dec. 31, 2017 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Glowpoint and our 100%-owned subsidiary, GP Communications, LLC, whose business function is to provide interstate telecommunications services for regulatory purposes. All material inter-company balances and transactions have been eliminated in consolidation. |
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Reclassification | Reclassification Certain prior year amounts have been reclassified to conform with the current year presentation. |
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Use of Estimates | Use of Estimates Preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from the estimates made. We continually evaluate estimates used in the preparation of our consolidated financial statements for reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. The significant areas of estimation include determining the allowance for doubtful accounts, deferred tax valuation allowance, accrued sales taxes and regulatory fees, stock-based compensation, the valuation of goodwill, the valuation of intangible assets and their estimated lives, and the estimated lives and recoverability of property and equipment. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We perform ongoing credit evaluations of our customers. We record an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. We also record additional allowances based on our aged receivables, which are determined based on historical experience and an assessment of the general financial conditions affecting our customer base. If our actual collections experience changes, revisions to our allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We do not obtain collateral from our customers to secure accounts receivable. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company considers its cash, accounts receivable, accounts payable and debt obligations to meet the definition of financial instruments. The carrying amount of cash, accounts receivable and accounts payable approximated their fair value due to the short maturities of these instruments. The carrying amounts of our debt obligations (see Note 9) approximate their fair values, which are based on borrowing rates that are available to the Company for loans with similar terms, collateral, and maturity. The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic 820“Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. |
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Revenue Recognition | Revenue Recognition Revenue billed in advance for video collaboration services is deferred until the revenue has been earned, which is when the related services have been performed. Other service revenue, including amounts passed through based on surcharges from our telecom carriers, related to the network services and collaboration services are recognized as service is provided. As the non-refundable, upfront installation and activation fees charged to our customers do not meet the criteria as a separate unit of accounting, they are deferred and recognized over the 12 to 24 month period estimated life of the customer relationship. Revenue related to professional services is recognized at the time the services are performed, and presented as required by ASC Topic 605 “Revenue Recognition”. Revenue derived from other sources are recognized when services are provided or events occur. |
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Taxes Billed to Customers and Remitted to Taxing Authorities | Taxes Billed to Customers and Remitted to Taxing Authorities We recognize taxes billed to customers in revenue and taxes remitted to taxing authorities in our cost of revenue. |
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Impairment of Long-Lived Assets and Intangible Assets | Impairment of Long-Lived Assets and Intangible Assets The Company assesses the impairment of long-lived assets used in operations, primarily fixed assets and purchased intangible assets subject to amortization when events and circumstances indicate that the carrying value of the assets might not be recoverable. For purposes of evaluating the recoverability of fixed assets, the undiscounted cash flows estimated to be generated by those assets are compared to the carrying amounts of those assets. If and when the carrying values of the assets exceed their fair values, then the related assets will be written down to fair value. Fair value of our intangible assets is determined using the relief from royalty methodology. This approach involves two steps: (a) estimating reasonable royalty rates for each intangible asset and (b) applying these royalty rates to a net revenue stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of each intangible asset. If the carrying amount of the intangible asset is greater than its implied fair value, an impairment in the amount of the excess is recognized and charged to operations. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in the Company’s strategic plan and/or other-than-temporary changes in market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. Long-lived assets are evaluated for impairment at least annually, as well as whenever an event or change in circumstances has occurred that could have a significant adverse effect on the fair value of long-lived assets (see Notes 5 and 6). |
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Capitalized Software Costs | Capitalized Software Costs The Company capitalizes certain costs incurred in connection with developing or obtaining internal-use software. All software development costs have been appropriately accounted for as required by ASC Topic 350-40 “Intangible – Goodwill and Other – Internal-Use Software”. Capitalized software costs are included in “Property and equipment” on our consolidated balance sheets and are amortized over three to four years. Software costs that do not meet capitalization criteria are expensed as incurred. |
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Deferred Financing Costs | Deferred Financing Costs Deferred financing costs relate to fees and expenses incurred in connection with entering into our debt agreements (see Note 9) and are amortized as interest expense over the contractual lives of the related credit facilities. |
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Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, and trade accounts receivable. We place our cash primarily in commercial checking accounts. Commercial bank balances may from time to time exceed federal insurance limits. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost and are depreciated over the estimated useful lives of the related assets, which range from three to five years. Leasehold improvements are amortized over the shorter of either the asset’s useful life or the related lease term. Depreciation is computed on the straight-line method for financial reporting purposes. |
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Income Taxes | Income Taxes We use the asset and liability method to determine our income tax expense or benefit. Deferred tax assets and liabilities are computed based on temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that are expected to be in effect when the differences are expected to be recovered or settled. Any resulting net deferred tax assets are evaluated for recoverability and, accordingly, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized. |
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Stock-based Compensation | Stock-based Compensation Stock-based awards have been accounted for as required by ASC Topic 718 “Compensation – Stock Compensation” (“ASC Topic 718”). Under ASC Topic 718 stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. |
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Research and Development | Research and Development Research and development expenses include internal and external costs related to developing new service offerings and features and enhancements to our existing services. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ASU 2014-09, “Revenue from Contracts with Customers.” The ASU relates to new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Subsequently, the FASB has issued amendments to certain aspects of the guidance including the effective date. The Company will adopt the guidance in the first quarter of 2018 using the modified-retrospective method. Based on the reviews and assessments performed to date, the Company expects the pattern of revenue recognition for substantially all of its businesses to be unchanged, and that upon adoption revenue will generally continue to be recognized at a single point in time when control is transferred to the customer. The Company anticipates an immaterial impact to retained earnings upon adoption, as well as an immaterial balance sheet impact related to the classification of amounts associated with sales returns reserves. In February 2016 the FASB issued ASU 2016-02, “Leases”. The ASU introduces a lessee model that results in most leases impacting the balance sheet. The ASU addresses other concerns related to the current leases model. Under ASU 2016-02, lessees will be required to recognize for all leases with terms longer than 12 months, at the commencement date of the lease, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. While we continue to evaluate the effect of adopting this guidance on our consolidated financial statements and related disclosures, we expect our operating leases, as disclosed in Note 13, will be subject to the new standard. We will recognize right-of-use assets and operating lease liabilities on our balance sheet upon adoption, which will increase our total assets and liabilities. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments” (Subtopic 230). This guidance clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The amendment addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. These updates are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. The guidance should be applied retrospectively unless it is impractical to do so; in which case, the guidance should be applied prospectively as of the earliest date practicable. Management does not expect the adoption of ASU 2016-15 to have a material impact on our financial statements. |
Prepaid Expenses and Other Current Assets (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands):
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Property and Equipment (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands):
(*) – Amortized over the shorter period of the estimated useful life (five years) or the lease term. |
Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Intangible assets consisted of the following (in thousands):
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Schedule of Future Amortization Expense | Amortization expense for each of the next five succeeding years will be as follows (in thousands):
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Accrued Expenses and Other Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following (in thousands):
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Debt consisted of the following (in thousands):
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Schedule of Maturities of Long-term Debt | Future maturities of debt were estimated as follows as of December 31, 2017 (not considering the Super G Payoff described above) (in thousands):
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Stock Based Compensation (Tables) |
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Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Options Granted, Exercised, Expired and Forfeited | A summary of stock options expired and forfeited under our plans and options outstanding as of, and changes made during, the years ended December 31, 2017 and 2016 is presented below (options in thousands):
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Shares Outstanding and Exercisable, By Exercise Price Range | Additional information as of December 31, 2017 is as follows (options in thousands):
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Share Activity | A summary of restricted stock granted, vested, forfeited and unvested outstanding as of, and changes made during, the years ended December 31, 2017 and 2016, is presented below (shares in thousands):
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Schedule of Compensation Expense | Stock-based compensation expense relating to restricted stock awards is allocated as follows (in thousands):
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RSUs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Share Activity | A summary of restricted stock units (“RSUs”) granted, vested, forfeited and unvested outstanding as of, and changes made during, the years ended December 31, 2017 and 2016, is presented below (shares in thousands):
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Schedule of Compensation Expense | Stock-based compensation expense relating to restricted stock units is allocated as follows (in thousands):
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Net Income (Loss) Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loss Per Share, Basic and Diluted | The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except per share data):
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Schedule of Potential Shares of Common Stock Excluded from Diluted Weighted Average Shares | The following table represents the potential shares that were excluded from the computation of weighted-average number of shares of common stock in computing the diluted net income (loss) per share for the periods presented because including them would have had an anti-dilutive effect (in thousands):
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Commitments and Contingencies (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum rental commitments under all non-cancelable operating leases are as follows (in thousands):
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Geographical Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Geographical Areas | For the years ended December 31, 2017 and 2016, there was no material revenue attributable to any individual foreign country. Approximately 1% of foreign revenue is billed in foreign currency and foreign currency gains and losses are not material. Revenue by geographic area is allocated as follows (in thousands):
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax (Benefit) Expense | The following table sets forth income before taxes and the income tax (benefit) expense (in thousands):
|
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Schedule of Effective Income Tax Rate Reconciliation | Our effective tax rate differs from the statutory federal tax rate as shown in the following table (in thousands):
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Schedule of Deferred Tax Assets and Liabilities | The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities is presented below (in thousands):
|
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 311 | $ 321 |
Prepaid maintenance contracts | 164 | 84 |
Prepaid software licenses | 120 | 214 |
Other prepaid expenses | 104 | 125 |
Due from vendors | 10 | 0 |
Prepaid network costs | 6 | 162 |
Prepaid taxes | 0 | 72 |
Prepaid expenses and other current assets | $ 715 | $ 978 |
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 938 | $ 1,090 |
Impairment charges, property and equipment | 238 | 76 |
Capitalized Software | ||
Property, Plant and Equipment [Line Items] | ||
Impairment charges, property and equipment | $ 232 | $ 64 |
Goodwill - Narrative (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment loss | $ 1,475,000 | $ 600,000 |
Goodwill | $ 7,750,000 | $ 9,225,000 |
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | ||
Intangible assets, gross | $ 5,877 | $ 5,877 |
Accumulated amortization | (5,251) | (4,568) |
Total | 626 | 1,309 |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Intangible assets, gross | 4,335 | 4,335 |
Accumulated amortization | $ (4,335) | |
Estimated Useful Life | 5 years | |
Affiliate network | ||
Business Acquisition [Line Items] | ||
Intangible assets, gross | $ 994 | 994 |
Accumulated amortization | $ (528) | |
Estimated Useful Life | 12 years | |
Trademarks | ||
Business Acquisition [Line Items] | ||
Intangible assets, gross | $ 548 | $ 548 |
Accumulated amortization | $ (388) | |
Estimated Useful Life | 8 years |
Intangible Assets - Narrative (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | ||
Impairment of intangible assets | $ 0 | |
Accumulated amortization | 5,251,000 | $ 4,568,000 |
Amortization expense | $ 683,000 | $ 869,000 |
Minimum | ||
Business Acquisition [Line Items] | ||
Intangible assets, estimated useful life | 5 years | |
Maximum | ||
Business Acquisition [Line Items] | ||
Intangible assets, estimated useful life | 12 years | |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Intangible assets, estimated useful life | 5 years | |
Accumulated amortization | $ 4,335,000 | |
Affiliate network | ||
Business Acquisition [Line Items] | ||
Intangible assets, estimated useful life | 12 years | |
Accumulated amortization | $ 528,000 | |
Trademarks | ||
Business Acquisition [Line Items] | ||
Intangible assets, estimated useful life | 8 years | |
Accumulated amortization | $ 388,000 |
Intangible Assets - Schedule of Future Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2018 | $ 127 | |
2019 | 127 | |
2020 | 113 | |
2021 | 69 | |
2022 | 69 | |
Thereafter | 121 | |
Total | $ 626 | $ 1,309 |
Accrued Expenses and Other Liabilities - Schedule of Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule Of Accrued Expenses [Line Items] | ||
Deferred revenue | $ 393 | $ 25 |
Super G Warrant liability | 165 | 0 |
Accrued compensation costs | 129 | 133 |
Other accrued expenses | 80 | 6 |
Accrued communication costs | 78 | 111 |
Accrued dividends on Series A-2 Preferred Stock | 59 | 47 |
Deferred rent expense | 46 | 71 |
Accrued professional fees | 35 | 68 |
Accrued interest expense | 18 | 658 |
Customer deposits | 0 | 93 |
Accrued expenses and other liabilities | 1,003 | 1,212 |
Series A-2 Preferred Stock | ||
Schedule Of Accrued Expenses [Line Items] | ||
Accrued dividends on Series A-2 Preferred Stock | $ 59 | $ 47 |
Accrued Sales Taxes and Regulatory Fees - Narrative (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued sales taxes and regulatory fees | $ 259 | $ 395 |
Debt - Schedule of Long-term Debt (Details) - USD ($) |
Dec. 31, 2017 |
Jul. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Long-term debt | $ 1,832,000 | |||
Unamortized debt discounts | (269,000) | $ (125,000) | ||
Net carrying value | 1,563,000 | $ 11,500,000 | 10,660,000 | |
Less: current maturities, net of debt discount | (1,194,000) | (10,660,000) | ||
Long-term obligations, net of debt discount | 369,000 | 0 | ||
Western Alliance Bank A/R Revolver | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 800,000 | 0 | ||
Super G Loan | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 1,032,000 | 0 | ||
Promissory Note | SRS Note | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 0 | 1,785,000 | ||
Net carrying value | $ 0 | |||
Main Street Capital Corporation | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 0 | $ 9,000,000 |
Debt - Capitalization (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jul. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | |||
Extinguishment of debt | $ 11,562,000 | ||
Proceeds from issuance of debt | 2,200,000 | ||
Payment of debt extinguishment or debt repayment with cash on hand | $ 350,000 | ||
Gain on extinguishment of debt | $ 9,045,000 | $ 0 | |
Write-off of debt discount | $ 89,000 | ||
Treasury stock shares acquired net of reissued (in shares) | 404,587 | ||
Treasury stock acquired, net of reissued | $ 121,376 | ||
Promissory Note | SRS Note | |||
Debt Instrument [Line Items] | |||
Extinguishment of debt | $ 2,562,000 | ||
Share price (in dollars per share) | $ 0.30 |
Debt - SRS Note Exchange Agreement (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2017 |
Jul. 06, 2017 |
|
Debt Instrument [Line Items] | ||||
Extinguishment of debt | $ 11,562 | |||
Issuance of shares from treasury for SRS Note Exchange | $ 2,159 | |||
Promissory Note | SRS Note | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt and Accrued Interest | 2,562 | |||
Notes Payable | 1,785 | |||
Interest Payable | 777 | |||
Stated interest rate percentage | 15.00% | |||
Long-term Debt, Waiver of Final Installment, Number of Days | 60 days | |||
Extinguishment of debt | $ 2,562 | |||
Issuance of shares from treasury for SRS Note Exchange (in shares) | 7,306,930 | |||
Issuance of shares from treasury for SRS Note Exchange | $ 2,192 | |||
Share price (in dollars per share) | $ 0.30 |
Debt - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
2018 | $ 1,370 | |
2019 | 462 | |
Long-term Debt | 1,832 | |
Western Alliance Bank A/R Revolver | ||
Debt Instrument [Line Items] | ||
2018 | 800 | |
2019 | 0 | |
Long-term Debt | 800 | $ 0 |
Super G Loan | ||
Debt Instrument [Line Items] | ||
2018 | 570 | |
2019 | 462 | |
Long-term Debt | $ 1,032 | $ 0 |
Stock Based Compensation - Table Expense Allocation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock option compensation expense | $ 18 | $ 361 |
Stock Based Compensation - Restricted Stock Activity (Details) - Restricted Stock - $ / shares shares in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Restricted Shares | ||
Unvested restricted shares outstanding, Beginning (in shares) | 363 | 261 |
Granted, restricted shares (in shares) | 170 | |
Vested, restricted shares (in shares) | (9) | (68) |
Forfeited, restricted shares (in shares) | (13) | |
Unvested restricted shares outstanding, Ending (in shares) | 341 | 363 |
Weighted Average Grant Price | ||
Unvested restricted shares, weighted average grant price, Beginning (in dollars per share) | $ 1.58 | $ 1.58 |
Granted, weighted average grant price (in dollars per share) | 0.55 | |
Vested, weighted average grant price (in dollars per share) | 1.47 | 1.67 |
Forfeited, weighted average grant price (in dollars per share) | 1.47 | |
Unvested restricted shares, weighted average grant price, Ending (in dollars per share) | $ 1.06 | $ 1.58 |
Stock Based Compensation - Stock Compensation Expense, Restricted Stock (Details) - Restricted Stock - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | $ 58 | $ 161 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | 6 | 7 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | 5 | 5 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | $ 47 | $ 149 |
Stock Based Compensation - Restricted Stock Unit Activity (Details) - RSUs - $ / shares shares in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Restricted Shares | ||
Unvested restricted shares outstanding, Beginning (in shares) | 3,196 | 2,164 |
Granted, restricted shares (in shares) | 2,261 | |
Vested, restricted shares (in shares) | (725) | (387) |
Forfeited, restricted shares (in shares) | (719) | (842) |
Unvested restricted shares outstanding, Ending (in shares) | 1,752 | 3,196 |
Weighted Average Grant Price | ||
Unvested restricted shares, weighted average grant price, Beginning (in dollars per share) | $ 0.62 | $ 1.02 |
Granted, weighted average grant price (in dollars per share) | 0.43 | |
Vested, weighted average grant price (in dollars per share) | 0.42 | 0.92 |
Forfeited, weighted average grant price (in dollars per share) | 0.94 | 1.00 |
Unvested restricted shares, weighted average grant price, Ending (in dollars per share) | $ 0.57 | $ 0.62 |
Stock Based Compensation - Stock Compensation Expense, Restricted Stock Units (Details) - RSUs - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | $ 382 | $ 407 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | 38 | 35 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | 54 | 39 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | 9 | 8 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock compensation expense | $ 281 | $ 325 |
Commitments and Contingencies - Narrative (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017
USD ($)
facility
|
Dec. 31, 2016
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | ||
Operating leases, number of facilities | facility | 2 | |
Operating lease payments | $ | $ 279 | $ 287 |
Commitments and Contingencies - Table Operating Lease Future Minimum Rental Commitment (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2018 | $ 308 |
2019 | 88 |
2020 | 23 |
Total | $ 419 |
Major Customers - Narrative (Details) - Customer Concentration Risk - customer |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Sales Revenue, Services, Net | ||
Concentration Risk [Line Items] | ||
Concentration risk, number of customers | 2 | 2 |
Sales Revenue, Services, Net | Major Customer Number One | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 23.00% | 16.00% |
Sales Revenue, Services, Net | Major Customer Number Two | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 16.00% | 12.00% |
Accounts Receivable | Major Customer Number One | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 65.00% | |
Accounts Receivable | Major Customer Number Two | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 1.00% |
Geographical Data - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting [Abstract] | ||
Revenue attributable to individual foreign country | $ 0 | $ 0 |
Long lived assets located in domestic markets | 100.00% | 100.00% |
Geographical Data - Revenue by Geographic Area (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | ||
Revenue | $ 14,799 | $ 19,218 |
Domestic | ||
Segment Reporting Information [Line Items] | ||
Revenue | 10,393 | 14,070 |
Foreign | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 4,406 | $ 5,148 |
Income Taxes - Summary of Income Tax Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current: | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Current income tax expense (benefit) | 0 | 0 |
Deferred: | ||
Federal | (212) | (73) |
State | (18) | (6) |
Deferred income tax expense (benefit) | (230) | (79) |
Income tax (benefit) expense | $ (230) | $ (79) |
Income Taxes - Summary of Effective Tax Rate (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||
U.S. federal income taxes at the statutory rate | $ 1,945 | $ (1,264) |
State taxes, net of federal effects | 146 | (108) |
Permanent differences | (244) | 10 |
Impact of state tax rate change to deferred | 0 | (36) |
Other, including effect of Tax Cuts and Jobs Act | 1,725 | (28) |
Change in valuation allowance | (3,802) | 1,347 |
Income tax (benefit) expense | $ (230) | $ (79) |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets: | ||
Tax benefit of operating loss carry forward | $ 7,942 | $ 11,612 |
Reserves and allowances | 1 | 12 |
Accrued expenses | 73 | 35 |
Charitable contributions | 134 | 198 |
Stock-based compensation | 802 | 1,098 |
Fixed assets | 0 | 102 |
Goodwill | 144 | 0 |
Intangible amortization | 61 | 0 |
Texas margin tax temporary credit | 233 | 239 |
Total deferred tax assets | 9,390 | 13,296 |
Valuation allowance | (9,390) | (13,192) |
Net deferred tax assets | 0 | 104 |
Deferred tax liabilities: | ||
Goodwill | 0 | 230 |
Intangible amortization | 0 | 104 |
Total deferred tax liabilities | 0 | 334 |
Net deferred tax liability | $ 0 | $ (230) |
Income Taxes - Narrative (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Decrease in valuation allowance | $ 3,802,000 | ||
Net operating loss carryforwards, permanent loss of tax benefit | $ 1,900,000 | ||
Net operating loss carryforwards | 32,226,000 | ||
Unrecognized tax benefits | 0 | $ 0 | |
Unrecognized tax benefits, income tax penalties and interest accrued | 0 | 0 | |
Unrecognized tax benefits, income tax penalties and interest expense | 0 | $ 0 | |
Increase in unrecognized tax benefits in next twelve months | 0 | ||
Decrease in unrecognized tax benefits in next twelve months | $ 0 |
401(k) Plan - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Retirement Benefits [Abstract] | ||
401(k) plan, employer contributions | $ 69 | $ 82 |
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