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Liquidity
12 Months Ended
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.