NATURE OF BUSINESS

9 Months Ended

Sep. 30, 2013

NATURE OF BUSINESS [Abstract]

NATURE OF BUSINESS

NOTE 1 – NATURE OF BUSINESS

Direct Insite Corp. (“Direct Insite” or the “Company”) operates as a Software as a Service provider (“SaaS”), providing financial supply chain automation and workflow efficiencies within the Procure-to-Pay and Order-to-Cash processes. Specifically, Direct Insite’s global electronic invoice (“e-invoice”) management services automate complex manual business processes such as invoice validation, order matching, consolidation, dispute handling, and e-payment processing in a business-to-business transaction based “fee for services” business model.

The Company’s revenue comes from (i) recurring, on-going services that are billed monthly; and (ii) non-recurring, professional services derived from the configuration of the Company’s software platform.

Throughout the year, the Company operated redundant data centers in Miami, Florida, and Santa Clara, California.

As described in Note 9, the Company has two major customers that accounted for 74.2% and 84.5% of the Company’s revenue for the three months ended September 30, 2013 and 2012, respectively, and 78.0% and 82.0% of the Company’s revenue for the nine months ended September 30, 2013 and 2012, respectively.  Loss of either one of these customers would have a material effect on the Company.

In February 2013, the Company was notified by HP Enterprise Services (“HP”) (see Note 9), that one of its customers (“HP Customer A”) was terminating its contract effective March 31, 2013.  Despite the Company’s efforts to negotiate a direct contractual agreement with this client, they ultimately decided to sunset its use of the application. As such, the Company did not record any revenue from HP Customer A after June 30, 2013.  This customer comprised 14.4% of the Company’s revenues for the three months ended September 30, 2012, and 11.0% and 14.1% of the Company’s revenues for the nine months ended September 30, 2013 and 2012, respectively.