Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 26, 2014 | Jun. 28, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'NTN BUZZTIME INC | ' | ' |
Entity Central Index Key | '0000748592 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $20,700,000 |
Entity Common Stock, Shares Outstanding | ' | 78,722,665 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets: | ' | ' |
Cash and cash equivalents | $5,455,000 | $2,721,000 |
Accounts receivable, net of allowances of $184 and $226, respectively | 641,000 | 610,000 |
Prepaid expenses and other current assets | 1,822,000 | 898,000 |
Total current assets | 7,918,000 | 4,229,000 |
Broadcast equipment and fixed assets, net | 3,237,000 | 3,783,000 |
Software development costs, net of accumulated amortization of $2,371 and $1,774, respectively | 2,317,000 | 1,980,000 |
Deferred costs | 562,000 | 600,000 |
Goodwill (Note 3) | 1,179,000 | 1,265,000 |
Intangible assets, net | 160,000 | 579,000 |
Other assets | 84,000 | 220,000 |
Total assets | 15,457,000 | 12,656,000 |
Current Liabilities: | ' | ' |
Accounts payable | 553,000 | 549,000 |
Accrued compensation | 647,000 | 598,000 |
Accrued expenses | 660,000 | 538,000 |
Sales taxes payable | 181,000 | 197,000 |
Income taxes payable | 81,000 | 79,000 |
Notes payable - current portion | 631,000 | 41,000 |
Obligations under capital lease - current portion | 25,000 | 100,000 |
Deferred revenue | 593,000 | 919,000 |
Other current liabilities | 237,000 | 367,000 |
Total current liabilities | 3,608,000 | 3,388,000 |
Notes payable, excluding current portion | 962,000 | 29,000 |
Obligations under capital leases, excluding current portion | 58,000 | 67,000 |
Deferred revenue, excluding current portion | 798,000 | 188,000 |
Deferred rent | 829,000 | 949,000 |
Other liabilities | 0 | 141,000 |
Total liabilities | 6,255,000 | 4,762,000 |
Commitments and contingencies | ' | ' |
Shareholders' Equity: | ' | ' |
Series A 10% cumulative convertible preferred stock, $.005 par value, $156 liquidation preference, 5,000 shares authorized; 156 shares issued and outstanding at December 31, 2013 and December 31, 2012 | 1,000 | 1,000 |
Common stock, $.005 par value, 168,000 and 84,000 shares authorized on December 31, 2013 and December 31, 2012, respectively; 78,649 and 71,123 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively | 393,000 | 355,000 |
Treasury stock, at cost, 503 shares at December 31, 2013 and December 31, 2012, respectively | -456,000 | -456,000 |
Additional paid-in capital | 121,432,000 | 118,956,000 |
Accumulated deficit | -112,799,000 | -111,730,000 |
Accumulated other comprehensive income (Note 9) | 631,000 | 768,000 |
Total shareholders' equity | 9,202,000 | 7,894,000 |
Total shareholders' equity and liabilities | $15,457,000 | $12,656,000 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts - accounts receivable | $184 | $226 |
Software accumulated amortization | 2,371 | 1,774 |
Preferred Stock Series A 10% par value per share | $0.01 | $0.01 |
Preferred Stock Series A liquidation preference | $156 | $156 |
Preferred Stock Series A shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock Series A shares outstanding | 156,000 | 156,000 |
Preferred stock shares issued | 156,000 | 156,000 |
Common stock par value | $0.01 | $0.01 |
Common stock shares authorized | 168,000,000 | 84,000,000 |
Common stock shares issued | 78,649,000 | 71,123,000 |
Common stock shares outstanding | 78,649,000 | 71,123,000 |
Treasury stock shares | 503,000 | 503,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement [Abstract] | ' | ' |
Revenues | $23,749 | $24,064 |
Operating expenses: | ' | ' |
Direct operating costs (includes depreciation and amortization of $2,116 and $2,158, respectively.) | 7,686 | 6,157 |
Selling, general and administrative | 16,449 | 18,248 |
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs) | 733 | 721 |
Total operating expenses | 24,868 | 25,126 |
Operating loss | -1,119 | -1,062 |
Other income (expense): | ' | ' |
Interest income | 3 | 3 |
Interest expense | -26 | -44 |
Other income | 135 | 25 |
Total other income (expense), net | 112 | -16 |
Loss before income taxes | -1,007 | -1,078 |
(Provision) benefit for income taxes | -46 | 83 |
Net loss | ($1,053) | ($995) |
Net loss income per common share - basic and diluted | ($0.01) | ($0.01) |
Weighted average shares outstanding - basic and diluted | 71,962,000 | 69,040,000 |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement [Abstract] | ' | ' |
Depreciation and amortization | $2,116 | $2,158 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net loss | ($1,053) | ($995) |
Other comprehensive income (loss), net of tax: | ' | ' |
Foreign currency translation adjustments (Note 14) | -137 | 46 |
Other comprehensive income (loss) | -137 | 46 |
Comprehensive loss | ($1,190) | ($949) |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Series A Cumulative Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
In Thousands, except Share data | |||||||
Beginning balance, value at Dec. 31, 2011 | $1 | $305 | $116,497 | ($456) | ($110,719) | $722 | $6,350 |
Beginning balance, shares at Dec. 31, 2011 | 161,000 | 60,927,000 | ' | ' | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' | ' | 46 | 46 |
Net loss | ' | ' | ' | ' | -955 | ' | -995 |
Net proceeds from issuance of common stock related to rights offering, shares | ' | 10,071,000 | ' | ' | ' | ' | ' |
Net proceeds from issuance of common stock related to rights offering, value | ' | 50 | 2,260 | ' | ' | ' | 2,310 |
Issuance of common stock upon vesting of restricted stock units, shares | ' | 37,000 | ' | ' | ' | ' | ' |
Issuance of common stock upon vesting of restricted stock units, value | ' | ' | -2 | ' | ' | ' | -2 |
Issuance of stock in lieu of dividends, shares | ' | 73,000 | ' | ' | ' | ' | ' |
Issuance of stock in lieu of dividends, value | ' | ' | 16 | ' | -16 | ' | ' |
Conversion of preferred stock to common stock, shares | -5,000 | 15,000 | ' | ' | ' | ' | ' |
Non-cash stock based compensation | ' | ' | 185 | ' | ' | ' | 185 |
Ending balance, value at Dec. 31, 2012 | 1 | 355 | 118,956 | -456 | -111,730 | 768 | 7,894 |
Ending balance, shares at Dec. 31, 2012 | 156,000 | 71,123,000 | ' | ' | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' | ' | -137 | -137 |
Net loss | ' | ' | ' | ' | -1,053 | ' | -1,053 |
Issuance of common stock upon vesting of restricted stock units, shares | ' | 326,000 | ' | ' | ' | ' | ' |
Issuance of common stock upon vesting of restricted stock units, value | ' | 2 | -18 | ' | ' | ' | -16 |
Issuance of stock in lieu of dividends, shares | ' | 35,000 | ' | ' | ' | ' | ' |
Issuance of stock in lieu of dividends, value | ' | ' | 16 | ' | -16 | ' | ' |
Non-cash stock based compensation | ' | ' | 132 | ' | ' | ' | 132 |
Net proceeds from issuance of common stock and warrants related to private placement, shares | ' | 6,000,000 | ' | ' | ' | ' | ' |
Net proceeds from issuance of common stock and warrants related to private placement, value | ' | 30 | 2,312 | ' | ' | ' | 2,342 |
Issuance of common stock upon exercise of stock options, shares | ' | 17,000 | ' | ' | ' | ' | ' |
Issuance of common stock upon exercise of stock options, shares | ' | ' | 1 | ' | ' | ' | 1 |
Issuance of common stock upon exercise of warrants, shares | ' | 798,000 | ' | ' | ' | ' | ' |
Issuance of common stock upon exercise of warrants, value | ' | 4 | -4 | ' | ' | ' | ' |
Issuance of common stock related to acquisition of Interactive Hospitality, shares | ' | 250,000 | ' | ' | ' | ' | ' |
Issuance of common stock related to acquisition of Interactive Hospitality, value | ' | 1 | -1 | ' | ' | ' | ' |
Issuance of common stock in lieu of payment to consultant, shares | ' | 100,000 | ' | ' | ' | ' | ' |
Issuance of common stock in lieu of payment to consultant, shares | ' | 1 | 38 | ' | ' | ' | 39 |
Ending balance, value at Dec. 31, 2013 | $1 | $393 | $121,432 | ($456) | ($112,799) | $631 | $9,202 |
Ending balance, shares at Dec. 31, 2013 | 156,000 | 78,649,000 | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows (used in) provided by operating activities: | ' | ' |
Net loss | ($1,053) | ($995) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 2,849 | 2,879 |
Provision for doubtful accounts | 35 | 119 |
Stock-based compensation | 132 | 185 |
Issuance of common stock to consultant in lieu of cash payment | 39 | 0 |
Loss from disposition of equipment and capitalized software | 243 | 15 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -66 | 21 |
Prepaid expenses and other assets | -845 | -432 |
Accounts payable and accrued expenses | -49 | -821 |
Income taxes payable | 7 | 2 |
Deferred costs | 37 | 532 |
Deferred revenue | 284 | 458 |
Deferred rent | -120 | 193 |
Net cash provided by operating activities | 1,493 | 2,156 |
Cash flows (used in) provided by investing activities: | ' | ' |
Capital expenditures | -861 | -1,226 |
Software development expenditures | -1,588 | -1,441 |
Acquisitions, net of cash acquired | 0 | -160 |
Changes in restricted cash | 0 | 50 |
Net cash used in investing activities | -2,449 | -2,777 |
Cash flows (used in) provided by financing activities: | ' | ' |
Principal payments on capital lease | -100 | -318 |
Proceeds from notes payable | 1,607 | 0 |
Payments on note payable | -84 | -39 |
Proceeds from exercise of stock options | 1 | 0 |
Proceeds from rights offering, net | 0 | 2,310 |
Proceeds from private placement of common stock, net | 2,342 | 0 |
Tax withholding related to net-share settlements of restricted stock units | -16 | -1 |
Net cash provided by financing activities | 3,750 | 1,952 |
Net increase in cash and cash equivalents | 2,794 | 1,331 |
Effect of exchange rate on cash | -60 | 16 |
Cash and cash equivalents at beginning of year | 2,721 | 1,374 |
Cash and cash equivalents at end of year | 5,455 | 2,721 |
Supplemental disclosures of cash flow information: Cash paid during the period for: | ' | ' |
Interest | 26 | 40 |
Income taxes | 26 | 45 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Equipment acquired under capital lease | 23 | 36 |
Issuance of common stock in lieu of payment of dividends | 16 | 15 |
Issuance of common stock in connection with net-share exercise of stock options and warrants | 4 | 0 |
Issuance of common stock in connection with acquisition | $1 | $0 |
1_Organization_of_Company
1. Organization of Company | 12 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
1. Organization of Company | ' |
Description of Business | |
NTN Buzztime, Inc. (the “Company”) was incorporated in Delaware in 1984 as Alroy Industries and changed its corporate name to NTN Communications, Inc. in 1985. The Company changed its name to NTN Buzztime, Inc. in 2005 to better reflect the growing role of the Buzztime consumer brand. | |
The Company provides an entertainment and marketing services platform for hospitality venues that offer games, events, and entertainment experiences to their consumers. The Company’s interactive entertainment network helps its network subscribers to acquire, engage and retain their consumers. The Company generates revenues by charging subscription fees for its service to its network subscribers, leasing equipment (including tablets used in its BEOND line and the cases and charging trays for such tablets) to certain network subscribers, hosting live trivia events, and from selling advertising aired on in-venue screens and as part of customized games. Currently, approximately 3,200 venues in the U.S. and Canada subscribe to the Company’s interactive entertainment network. | |
Basis of Accounting Presentation | |
The consolidated financial statements include the accounts of NTN Buzztime, Inc. and its wholly-owned subsidiaries: IWN, Inc., IWN, L.P., Buzztime Entertainment, Inc., NTN Wireless Communications, Inc., NTN Software Solutions, Inc., NTN Canada, Inc., and NTN Buzztime, Ltd., all of which, other than NTN Canada, Inc., are dormant subsidiaries. Unless otherwise indicated, references to “NTN,” “we”, “us” and “our” include the Company and its consolidated subsidiaries. | |
Reclassifications | |
The Company reclassified the consolidated balance sheet for the period ended December 31, 2012 to conform to the 2013 presentation. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies and Estimates | 12 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
2. Summary of Significant Accounting Policies and Estimates | ' | ||
Consolidation—The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). All significant intercompany balances and transactions have been eliminated in consolidation. | |||
Use of Estimates—Preparing the Company’s consolidated financial statements requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to deferred costs and revenues; depreciation of broadcast equipment; allowance for doubtful accounts; investments; stock-based compensation assumptions; impairment of software development costs, intangible assets and goodwill, and broadcast equipment; contingencies, including the reserve for sales tax inquiries; the provision for income taxes, including the valuation allowance; and purchase price allocations related to acquisitions. The Company bases its estimates on a combination of historical experience and various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about significant carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates. | |||
Cash and Cash Equivalents—Accounting Standards Codification (“ASC”) No. 230, Statement of Cash Flows, defines “cash and cash equivalents” as any short-term, highly liquid investment that is both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. For the purpose of financial statement presentation, the Company has applied the provisions of ASC No. 230, as it considers all highly liquid investment instruments with original maturities of three months or less, or any investment redeemable without penalty or loss of interest, to be cash equivalents. | |||
Capital Resources—The Company is dependent upon cash on hand and cash flow from operations to meet its liquidity needs. The Company has a credit facility with a lender under which the Company may borrow up to $3,000,000 for the purchase of certain capital equipment. As of December 31, 2013, the Company borrowed approximately $1,623,000, which is recorded in short-term and long-term notes payable on the accompanying consolidated balance sheet. As of December 31, 2013, $1,564,000 remained outstanding. The Company believes existing cash and cash equivalents, funds generated from operations, the proceeds received from the private placement completed in November 2013 (See Note 10) and the remaining availability on its credit facility will be sufficient to meet its operating cash requirements and to fulfill its debt obligations for at least the next twelve months. In order to execute its operating and strategic plan and to position the Company to better take advantage of market opportunities and opportunities for growth, the Company is evaluating additional financing alternatives, including raising additional capital through public or private equity or debt financing. If net cash provided by operating activities and its cash and cash equivalents on hand are not sufficient to meet future cash requirements, the Company may be required to reduce planned capital expenses, reduce operational cash uses, sell assets or seek financing. Any actions the Company may undertake to reduce planned capital purchases, reduce expenses, or generate proceeds from the sale of assets may be insufficient to cover shortfalls in available funds. If the Company requires additional capital, it may be unable to secure additional financing on terms that are acceptable to the Company, or at all. | |||
Allowance for Doubtful Accounts—The Company maintains allowances for doubtful accounts for estimated losses resulting from nonpayment by its customers. The Company reserves for all accounts that have been suspended or terminated from its Buzztime network services and for customers with balances that are greater than a predetermined number of days past due. The Company analyzes historical collection trends, customer concentrations and creditworthiness, economic trends and anticipated changes in customer payment patterns when evaluating the adequacy of its allowance for doubtful accounts for specific and general risks. Additional reserves may also be established if specific customers’ balances are identified as potentially uncollectible. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. | |||
Broadcast Equipment and Fixed Assets—Broadcast equipment and fixed assets are recorded at cost. Equipment under capital leases is recorded at the present value of future minimum lease payments. Depreciation of broadcast equipment and fixed assets is computed using the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements and fixed assets under capital leases is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease period. | |||
The Company incurs a relatively significant level of depreciation expense in relation to its operating income. The amount of depreciation expense in any fiscal year is largely related to the estimated life of handheld wireless Playmaker devices and associated electronics and the computers located at our network subscribers’ sites. The Classic Playmakers are depreciated over a five-year life, the BEOND Playmakers are depreciated over three-year life and the associated electronics and computers are depreciated over two to four years. The depreciable life of these assets was determined based on the shorter of the contractual capital lease period or their estimated useful life, which considers anticipated technology changes. If the Playmakers and associated electronics and the computers turn out to have longer lives, on average, than estimated, then depreciation expense would be significantly reduced in those future periods. Conversely, if the Playmakers and associated electronics and the computers turn out to have shorter lives, on average, than estimated, then depreciation expense would be significantly increased in those future periods. | |||
Goodwill and Other Intangible Assets—Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a purchase combination determined to have an indefinite useful life are not amortized, but instead are assessed quarterly for impairment based on qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the goodwill is less than its carrying amount. Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events. If after assessing the totality of events or circumstances the Company determines it is not more likely than not that the goodwill is less than its carrying amount, then performing the two-step impairment test outlined in ASC No. 350 is unnecessary. During the year ended December 31, 2013, the Company performed the annual qualitative assessment of its goodwill related to NTN Canada, Inc., and determined that there were no indications of impairment. | |||
ASC No. 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC No. 360, Property, Plant and Equipment. In accordance with ASC No. 360, the Company assesses potential impairments of its long-lived assets whenever events or changes in circumstances indicate the asset’s carrying value may not be recoverable. An impairment loss would be recognized when the carrying amount of a long-lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. The Company performed its annual review of its other intangible assets and determined that there were no indications of impairment for the year ended December 31, 2013. | |||
Assessments of Functional Currencies—The United States dollar is the Company’s functional currency, except for its operations in Canada where the functional currency is the Canadian dollar. The financial position and results of operations of the Canadian subsidiary is measured using the foreign subsidiary’s local currency as the functional currency. In accordance with ASC No. 830, Foreign Currency Matters, revenues and expenses of its foreign subsidiary have been translated into U.S. dollars at weighted average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded as a separate component of shareholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the years ended December 31, 2013 and 2012, the Company recorded $24,000 of foreign currency transaction gains and $20,000 in foreign currency transaction losses, respectively, due to settlements of intercompany transactions, re-measurement of intercompany balances with its Canadian subsidiary and other non-functional currency denominated transactions, which are included in other income in the accompanying statements of operations. Fluctuations in the rate of exchange between the U.S. dollar and Canadian dollar may affect the Company’s results of operations and period-to-period comparisons of its operating results. The Company does not currently engage in hedging or similar transactions to reduce these risks. For the year ended December 31, 2013, the net impact to the Company’s results of operations from the effect of exchange rate fluctuations was immaterial. | |||
Revenue Recognition—The Company recognizes revenue from recurring service fees earned from its network subscribers, Stump! Trivia events, advertising revenues, leased equipment and distribution and licensing fees from its Buzztime-branded content delivered primarily through its interactive consumer platforms. To the extent its arrangements contain multiple deliverables the Company evaluates the criteria in ASC No. 605, Revenue Recognition, to determine whether such deliverables represent separate units of accounting. In order to be considered a separate unit of accounting, the delivered items in an arrangement must have stand-alone value to the customer and objective and reliable evidence of fair value must exist for any undelivered elements. The Company’s arrangements for the transmission of the Buzztime network contain two deliverables: the installation of its equipment and the transmission of its network content for which the Company receives monthly subscription fees. As the installation deliverable does not have stand-alone value to the customer, it does not represent a separate unit of accounting. Therefore, for the Classic product, all installation fees received are deferred and recognized as revenue on a straight-line basis over the estimated life of the customer relationship. Because deployment of the BEOND system is so new, the Company has not yet established an estimated life of a BEOND customer, and therefore, it is deferring and recognizing installation fees as revenue on a straight-line basis over the customer contract term. All installation fees not recognized in revenue have been recorded as deferred revenue in the accompanying consolidated balance sheets. | |||
In addition, the direct expenses of the installation, commissions, setup and training are deferred and amortized on a straight-line basis and are classified as deferred costs on the accompanying consolidated balance sheets. For these direct expenses that are associated with the Classic product, the amortization period approximates the estimated life of the customer relationship for deferred direct costs that are of an amount that is less than or equal to the deferred revenue for the related contract. For costs that exceed the deferred revenue, the amortization period is the initial term of the contract, in accordance with ASC No. 605, which is generally one year. For direct costs associated with the BEOND product, the amortization period approximates the life of the contract. | |||
The Company evaluated its lease transactions in accordance with ASC No. 840, Leases, to determine classification of the leases against the following criteria: | |||
· | The lease transfers ownership of the property to the lessee by the end of the lease term; | ||
· | There is a bargain purchase option; | ||
· | The lease term is equal to or greater than 75% of the economic life of the equipment; or | ||
· | The present value of the minimum payments is equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. | ||
Because the Company’s current leasing agreement meets at least one of the criteria above and collectability of the minimum lease payments is reasonably assured and there are no important uncertainties surrounding the amount of reimbursable costs yet to be incurred under the lease, the Company classifies the lease as a sales-type lease, and it recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed and determinable and collectability is reasonably assured. | |||
Revenues from advertising, Stump! Trivia events and royalties are recognized when all material services or conditions relating to the transaction have been performed or satisfied. | |||
The Company has arrangements with certain third parties to share in revenue generated from some of its products and services. The Company evaluates recognition of the associated revenue in accordance with ASC No. 605-45, Revenue Recognition, Principal Agent Considerations. When indicators suggest that the Company is functioning as a principal, it records revenue gross and the corresponding amounts paid to third parties are recorded as direct expense. Conversely, when indicators suggest that the Company is functioning as an agent, it records revenue net of amounts paid to third parties. | |||
Software Development Costs—The Company capitalizes costs related to developing certain software products in accordance with ASC No. 350. Amortization expense relating to capitalized software development costs totaled $864,000 and $650,000 for the years ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, approximately $934,000 and $156,000, respectively, of capitalized software costs were not subject to amortization as the development of various software projects was not complete. | |||
The Company performed its annual review of software development projects for the years ended December 31, 2013 and 2012, determined to abandon various software development projects that it concluded were no longer a current strategic fit or for which the Company determined that the marketability of the content had decreased due to obtaining additional information regarding the specific industry for which the content was intended. As a result, an impairment of $230,000 and $7,000 was recognized for the years ended December 31, 2013 and 2012, respectively, which was included in our selling, general and administrative expenses. | |||
Advertising Costs – Marketing-related advertising costs are expensed as incurred and amounted to $9,000 and $15,000 for the years ended December 31, 2013 and 2012, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. | |||
Shipping and Handling Costs—Shipping and handling costs are included in direct operating costs in the accompanying consolidated statements of operations and are expensed as incurred. | |||
Stock-Based Compensation— The Company estimates the fair value of its stock options using a Black-Scholes option pricing model, consistent with the provisions of ASC No. 718, Compensation – Stock Compensation and ASC No. 505-50, Equity – Equity-Based Payments to Non-Employees.. The fair value of stock options granted is recognized to expense over the requisite service period. Stock-based compensation expense for share-based payment awards to employees is recognized using the straight-line single-option method. Stock-based compensation expense for share-based payment awards to non-employees is recorded at its fair value on the grant date and is periodically re-measured as the underlying awards vest. Stock-based compensation expense is reported as selling, general and administrative based upon the departments to which substantially all of the associated employees report. | |||
Income Taxes—Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. | |||
ASC No. 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. A tax position that meets the “more-likely-than-not” criterion shall be measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement. The Company reviewed its tax positions and determined that an adjustment to the tax provision is not considered necessary nor is a reserve for income taxes required. | |||
Earnings Per Share—Basic and diluted loss per common share have been computed by dividing the losses applicable to common stock by the weighted average number of common shares outstanding. The Company’s basic and fully diluted EPS calculation are the same since the increased number of shares that would be included in the diluted calculation from assumed exercise of common stock equivalents would be anti-dilutive to the net loss in each of the years shown in the consolidated financial statements. | |||
Segment Reporting—In accordance with ASC No. 280, Segment Reporting, the Company has determined that it operates as one operating segment. Decisions regarding the Company’s overall operating performance and allocation of our resources are assessed on a consolidated basis. | |||
Recent Accounting Pronouncements | |||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740). This update improves the reporting for unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The update is expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The update is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company is January 1, 2014. The Company does not anticipate that adopting this update will have a material impact on its consolidated financial statements. | |||
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Topic 205) - Liquidation Basis of Accounting. This update addresses the requirements and methods of applying the liquidation basis of accounting and the disclosure requirements within ASC Topic 205 for the purpose of providing consistency among liquidating entities reporting under U.S. GAAP. Generally, this update provides guidance for the preparation of financial statements and disclosures when liquidation is imminent. This update is effective for periods beginning after December 15, 2013, which for the Company is January 1, 2014. The Company does not anticipate that adopting this update will have a material impact on its consolidated financial statements. | |||
In March 2013, FASB issued ASU No. 2013-05, Foreign Currency Matters. The amendments in this update resolve the diversity in practice about whether current literature applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in this update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This update is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013, which for the Company is January 1, 2014. The Company does not anticipate that adopting this update will have a material impact on our consolidated financial statements. |
3_Prepaid_Expenses_and_Other_C
3. Prepaid Expenses and Other Current Assets | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Prepaid Expense and Other Assets [Abstract] | ' | ||||||||
3. Prepaid Expenses and Other Current Assets | ' | ||||||||
Prepaid expenses and other current assets consist of the following at December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Site equipment to be installed | $ | 1,069,000 | $ | 77,000 | |||||
Deposits | 413,000 | 437,000 | |||||||
Prepaid expenses | 340,000 | 384,000 | |||||||
Total | $ | 1,822,000 | $ | 898,000 |
4_Broadcast_Equipment_and_Fixe
4. Broadcast Equipment and Fixed Assets | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
4. Broadcast Equipment and Fixed Assets | ' | ||||||||
Broadcast equipment and fixed assets are recorded at cost and consist of the following at December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Broadcast equipment | $ | 18,699,000 | $ | 18,148,000 | |||||
Machinery and equipment | 1,940,000 | 2,175,000 | |||||||
Furniture and fixtures | 185,000 | 641,000 | |||||||
Leasehold improvements | 610,000 | 610,000 | |||||||
Other equipment | 24,000 | 24,000 | |||||||
21,458,000 | 21,598,000 | ||||||||
Accumulated depreciation | (18,221,000 | ) | (17,815,000 | ) | |||||
Total | $ | 3,237,000 | $ | 3,783,000 | |||||
Depreciation expense totaled $1,567,000 and $1,851,000 for the years ended December 31, 2013 and 2012, respectively. |
5_Goodwill_and_Other_Intangibl
5. Goodwill and Other Intangible Assets | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
5. Goodwill and Other Intangible Assets | ' | ||||||||||||||||||||||||
The Company’s goodwill balance relates to the purchase of NTN Canada. The Company performed its annual qualitative assessment of goodwill impairment for NTN Canada as of December 31, 2013, and it was determined that there were no indications of impairment. | |||||||||||||||||||||||||
The Company also has other intangible assets comprised predominantly of developed technology, trivia databases, trademarks, and acquired customer relationships. As of December 31, 2013 and 2012, there were no indications of impairment on the Company’s intangible assets. | |||||||||||||||||||||||||
The weighted average remaining useful life for all intangible assets is 0.7 years as of December 31, 2013. Amortization expense relating to all intangible assets totaled $418,000 and $378,000 for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||||||||||
As of December 31, 2013 and 2012, intangible assets with estimable lives were comprised of the following: | |||||||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||||||||||
Gross Carrying | Accumulated | Net Book | Gross Carrying | Accumulated | Net Book | ||||||||||||||||||||
Value | Amortization | Value | Value | Amortization | Value | ||||||||||||||||||||
Acquired customer lists | $ | 545,000 | $ | (425,000 | ) | $ | 120,000 | $ | 545,000 | $ | (174,000 | ) | $ | 371,000 | |||||||||||
Acquired technology | 599,000 | (559,000 | ) | 40,000 | 599,000 | (440,000 | ) | 159,000 | |||||||||||||||||
Trivia database | 417,000 | (417,000 | ) | – | 448,000 | (405,000 | ) | 43,000 | |||||||||||||||||
Acquired subscription customers | 874,000 | (874,000 | ) | – | 874,000 | (868,000 | ) | 6,000 | |||||||||||||||||
Trademarks and trademark licenses | 67,000 | (67,000 | ) | – | 67,000 | (67,000 | ) | – | |||||||||||||||||
Acquired advertising customers | 302,000 | (302,000 | ) | – | 302,000 | (302,000 | ) | – | |||||||||||||||||
Total | $ | 2,804,000 | $ | (2,644,000 | ) | $ | 160,000 | $ | 2,835,000 | $ | (2,256,000 | ) | $ | 579,000 | |||||||||||
The estimated aggregate amortization expense relating to the Company’s intangible assets for the five succeeding years is as follows: | |||||||||||||||||||||||||
Year Ending | Estimated Aggregate | ||||||||||||||||||||||||
Amortization Expense | |||||||||||||||||||||||||
2014 | $ | 160,000 | |||||||||||||||||||||||
Thereafter | – | ||||||||||||||||||||||||
Total | $ | 160,000 | |||||||||||||||||||||||
6_Fair_Value_of_Financial_Inst
6. Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2013 | |
Fair Value Disclosures [Abstract] | ' |
6. Fair Value of Financial Instruments | ' |
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short maturity of these instruments. | |
ASC No. 820, Fair Value Measurements and Disclosures, applies to certain assets and liabilities that are being measured and reported on a fair value basis. Broadly, the ASC No. 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC No. 820 also establishes a fair value hierarchy for ranking the quality and reliability of the information used to determine fair values. This hierarchy is as follows: | |
Level 1: Quoted market prices in active markets for identical assets or liabilities. | |
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. | |
Level 3: Unobservable inputs that are not corroborated by market data. | |
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis: | |
The Company does not have assets or liabilities that are measured at fair value on a recurring basis. | |
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis: | |
Certain assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill written down to fair value when determined to be impaired, acquired assets and long-lived assets including capitalized software that are written down to fair value when they are held for sale or determined to be impaired. The valuation methods for goodwill, assets and liabilities resulting from acquisitions, and long-lived assets involve assumptions concerning interest and discount rates, growth projections, and/or other assumptions of future business conditions. As all of the assumptions employed to measure these assets and liabilities on a nonrecurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified in Level 3 of the valuation hierarchy. | |
There were no transfers between fair value measurement levels during the year ended December 31, 2013. |
7_Accrued_Compensation
7. Accrued Compensation | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Compensation Related Costs [Abstract] | ' | ||||||||
7. Accrued Compensation | ' | ||||||||
Accrued compensation consisted of the following at December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Accrued vacation | $ | 439,000 | $ | 423,000 | |||||
Accrued salaries | 137,000 | 111,000 | |||||||
Accrued bonuses | 45,000 | 33,000 | |||||||
Accrued commissions | 26,000 | 31,000 | |||||||
Total accrued compensation | $ | 647,000 | $ | 598,000 | |||||
8_Concentrations_of_Risk
8. Concentrations of Risk | 12 Months Ended |
Dec. 31, 2013 | |
Risks and Uncertainties [Abstract] | ' |
8. Concentrations of Risk | ' |
Credit Risk | |
At times, the Company’s cash balances held in financial institutions are in excess of federally insured limits. The Company performs periodic evaluations of the relative credit standing of financial institutions and seeks to limit the amount of risk by selecting financial institutions with a strong credit standing. The Company believes it is not exposed to any significant credit risk with respect to its cash and cash equivalents. | |
The Buzztime network provides services to group viewing locations, generally restaurants, sports bars and lounges throughout North America. Concentration of credit risk with respect to trade receivables is limited due to the large number of customers comprising the Company’s customer base, and their dispersion across many different geographic locations. The Company performs credit evaluations of new customers and generally requires no collateral. The Company maintains an allowance for doubtful accounts to provide for credit losses. | |
Significant Customer | |
For the years ended December 31, 2013 and 2012, the Company generated approximately $7,648,000 and $5,585,000, respectively, of total revenue from a national chain, Buffalo Wild Wings together with its franchisees. As of December 31, 2013 and 2012, approximately $259,000 and $123,000, respectively, was included in accounts receivable from this customer. | |
Equipment Suppliers | |
The tablet used in the Company’s BEOND product line is manufactured by one unaffiliated third party. The Company currently purchases the BEOND tablets from unaffiliated third parties, and it currently purchases equipment (consisting of cases and charging trays for the tablet playmaker) from an unaffiliated manufacturer located in China. The Company currently purchases its Classic playmakers from an unaffiliated manufacturer located in Taiwan pursuant to a supply agreement, the term of which automatically renews for one year periods. The Company currently does not have alternative sources for its Classic playmakers or its tablet playmaker equipment or an alternative manufacturer of the tablet or an alternative device to the tablet. | |
As of December 31, 2013 and 2012, approximately $32,000 and $15,000, respectively, were included in accounts payable or accrued expenses for equipment suppliers. The Company is committed to purchasing up to 30,000 tablets by December 31, 2014. |
9_Basic_and_Diluted_Earnings_p
9. Basic and Diluted Earnings per Common Share | 12 Months Ended |
Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ' |
9. Basic and Diluted Earnings per Common Share | ' |
Basic earnings per share excludes the dilutive effects of options, warrants and other convertible securities. Diluted earnings per share reflects the potential dilutions of securities that could share in the Company’s earnings. Options, warrants, convertible preferred stock and deferred stock units representing approximately 9,607,000 and 7,030,000 shares were excluded from the computations of diluted net loss per common share for the years ended December 31, 2013 and 2012, respectively, as their effect was anti-dilutive. | |
10_Stockholders_Equity
10. Stockholders' Equity | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Shareholders' Equity: | ' | ||||||||||||||||
10. Stockholders' Equity | ' | ||||||||||||||||
Capital Stock | |||||||||||||||||
At the Company’s 2013 annual meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to increase the number of total authorized shares from 94,000,000 to 178,000,000 and to increase the number of authorized shares of common stock from 84,000,000 to 168,000,000. The Company filed a certificate of amendment of the restated certificate of incorporation of the Company with the Delaware Secretary of State on June 11, 2013 to effect such amendment and it was effective on that same date. | |||||||||||||||||
Private Placement | |||||||||||||||||
In November 2013, the Company completed a private placement of units (consisting of shares of common stock and warrants to purchase shares of common stock) to accredited investors. The purchase price of each unit was $0.40 for gross proceeds of $2,400,000. In the aggregate, the Company issued 6,000,000 shares of common stock and warrants to purchase 3,600,000 shares. The warrants have an exercise price of $0.40 per share and are exercisable beginning on the six-month anniversary of the issuance date and expire on the five-year anniversary of the issuance date. | |||||||||||||||||
Pursuant to the registration rights agreement entered into in connection with the private placement, the Company filed a registration statement with the Securities and Exchange Commission under the Securities Act of 1933 to register for resale by the investors the shares of common stock, and the shares of common stock issuable upon exercise of the warrants, sold to the investors in the private placement. The registration statement was declared effective on December 5, 2013. | |||||||||||||||||
Also pursuant to the registration rights agreement, the Company is obligated to pay to each investor a monthly payment of 1% (not to exceed 10%) of the aggregate purchase price paid by such investor as liquidation damages for as long as the following circumstances are in effect: | |||||||||||||||||
· | In the event the Company does not file the registration statement within the timeframe indicated in the Agreement; | ||||||||||||||||
· | If the registration statement is not declared effective; or | ||||||||||||||||
· | After the effective date, the registration statement ceases to be effective for more than 15 consecutive calendar days or more than an aggregate of 30 calendar days (which need not be consecutive calendar days) during any 12-month period, unless the Company is required to suspend the effectiveness, in which case, such aggregate of 30 calendar days shall be extended to an aggregate of 60 calendar days. | ||||||||||||||||
As indicated above, the Company filed the registration statement, and it was declared effective within the timeframe indicated in the registration rights agreement. The Company has determined that the likelihood of the effective registration statement becoming ineffective is remote. Accordingly, the Company did not record a loss contingency for the 1% liquidation damages payments. | |||||||||||||||||
Rights Offering | |||||||||||||||||
In February 2012, the Company completed a rights offering to its stockholders of record as of February 2, 2012. The Company issued a total of 2,070,719 shares of its common stock at a subscription price of $0.25 per share. In connection with the rights offering, the Company entered into an investment agreement with Matador Capital Partners, LP, or Matador. Mr. Jeffrey A. Berg, one of the Company’s directors and its Interim Chief Executive Officer, is the managing member of the general partner of Matador. Under the terms of the investment agreement, upon expiration of the rights offering, Matador purchased for $0.25 per share 8,000,000 shares of our common stock not subscribed for and purchased by holders upon exercise of their subscription rights. The Company received gross proceeds of $2.5 million from the rights offering and under the investment agreement. | |||||||||||||||||
Equity Incentive Plans | |||||||||||||||||
2004 Performance Incentive Plan | |||||||||||||||||
In September 2004 at a Special Meeting of Stockholders, the Company’s stockholders approved the 2004 Performance Incentive Plan (the “2004 Plan”). The 2004 Plan provided for the issuance of up to 2,500,000 shares of NTN common stock. In addition, all shares that remained unissued under the 1995 Employee Stock Option Plan (the “1995 Plan”) on the effective date of the 2004 Plan, and all shares issuable upon exercise of options granted pursuant to the 1995 Plan that expire or become unexercisable for any reason without having been exercised in full, were available for issuance under the 2004 Plan. On the effective date, the 1995 Plan had approximately 77,000 options available for grant. Options under both the 1995 Plan and the 2004 Plan have a term of up to ten years, and are exercisable at a price per share not less than the fair market value on the date of grant. In September 2009, the 2004 Plan expired. All awards that were granted under the 2004 Plan will continue to be governed by the 2004 Plan until they are exercised or expire in accordance with that plan’s terms. As of December 31, 2013, there were approximately 773,000 options outstanding under the 2004 Plan. | |||||||||||||||||
2010 Performance Incentive Plan | |||||||||||||||||
In June 2010, the Company’s shareholders approved the 2010 Performance Incentive Plan (the “2010 Plan”). The 2010 Plan provides for the issuance of up to 6,000,000 shares of NTN common stock. Under the 2010 Plan, options for the purchase of NTN common stock or other instruments such as restricted stock units may be granted to officers, directors, employees and consultants. The Board of Directors designated its Nominating and Corporate Governance/Compensation Committee as the 2010 Plan Committee. Stock options granted under the 2010 Plan may either be incentive stock options or nonqualified stock options. A stock option granted under the 2010 Plan generally cannot be exercised until it becomes vested. The 2010 Plan Committee establishes the vesting schedule of each stock option at the time of grant. At its discretion, the 2010 Plan Committee can accelerate the vesting, extend the post-termination exercise term or waive restrictions of any stock options or other awards under the 2010 Plan. Options under the 2010 Plan have a term of up to ten years, and are exercisable at a price per share not less than the fair market value on the date of grant. As of December 31, 2013, there were approximately 1,891,000 options outstanding under the 2010 Plan. | |||||||||||||||||
Stock-Based Compensation Valuation Assumptions | |||||||||||||||||
The Company records stock-based compensation in accordance with ASC No. 718, Compensation – Stock Compensation and ASC No. 505-50, Equity – Equity-Based Payments to Non-Employees. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period. Stock-based compensation expense for share-based payment awards to employees is recognized using the straight-line single-option method. Stock-based compensation expense for share-based payment awards to non-employees is recorded at its fair value on the grant date and is periodically re-measured as the underlying awards vest. | |||||||||||||||||
The Company uses the historical stock price volatility as an input to value its stock options under ASC No. 718. The expected term of stock options represents the period of time options are expected to be outstanding and is based on observed historical exercise patterns of the Company, which the Company believes are indicative of future exercise behavior. For the risk-free interest rate, the Company uses the observed interest rates appropriate for the term of time options are expected to be outstanding. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. | |||||||||||||||||
The following weighted-average assumptions were used for grants issued during 2013 and 2012 under the ASC No. 718 requirements: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average risk-free rate | 0.60% | 0.53% | |||||||||||||||
Weighted average volatility | 79.82% | 95.21% | |||||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||||||
Expected life | 4.80 years | 5.71 years | |||||||||||||||
ASC No. 718 requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeiture rates differ from those estimates. Forfeitures were estimated based on historical activity for the Company. Stock-based compensation expense for employees in 2013 and 2012 was $132,000 and $185,000, respectively, and is expensed in selling, general and administrative expenses and credited to the additional paid-in-capital account. | |||||||||||||||||
Stock Option Activity | |||||||||||||||||
The following table summarizes stock option activity for the year ended December 31, 2013 and 2012: | |||||||||||||||||
Outstanding | Weighted | Weighted | Aggregate Intrinsic | ||||||||||||||
Options | Average Exercise | Average | Value | ||||||||||||||
Price per Share | Remaining | ||||||||||||||||
Contractual | |||||||||||||||||
Life (in years) | |||||||||||||||||
Outstanding December 31, 2011 | 4,314,000 | $ | 0.59 | 7.74 | $ | 2,000 | |||||||||||
Granted | 452,000 | 0.15 | – | – | |||||||||||||
Cancelled | (1,351,000 | ) | 0.51 | – | – | ||||||||||||
Forfeited | (1,596,000 | ) | 0.45 | – | – | ||||||||||||
Expired | (5,000 | ) | 0.98 | – | – | ||||||||||||
Outstanding December 31, 2012 | 1,814,000 | 0.66 | 6.37 | 25,000 | |||||||||||||
Granted | 1,280,000 | 0.27 | – | – | |||||||||||||
Exercised | (30,000 | ) | 0.17 | – | – | ||||||||||||
Cancelled | (245,000 | ) | 0.49 | – | – | ||||||||||||
Forfeited | (102,000 | ) | 0.19 | – | – | ||||||||||||
Expired | (53,000 | ) | 1.09 | – | – | ||||||||||||
Outstanding December 31, 2013 | 2,664,000 | $ | 0.5 | 7.14 | $ | 706,000 | |||||||||||
Options vested and exercisable at December 31, 2013 | 1,315,000 | $ | 0.76 | 5.14 | $ | 201,000 | |||||||||||
The aggregate intrinsic value of options at December 31, 2013 is based on the company’s closing stock price on that date of $0.56 per share as reported by the NYSE MKT. The total intrinsic value of options exercised during the year ended December 31, 2013 was $6,000. Pursuant to the 2004 Plan and the 2010 Plan, stock option exercises could be made on a net-exercise arrangement, where shares of common stock are withheld in the amount of the exercise price as payment of the exercise price instead of cash. Under such net-exercise arrangements, options to purchase approximately 25,000 shares of common stock were exercised and approximately 13,000 shares of common stock were issued. The Company received approximately $1,400 in cash payments for the exercise of options to purchase approximately 4,000 shares. There were no stock options exercised during the year ended December 31, 2012. | |||||||||||||||||
The per share weighted average grant-date fair value of stock options granted during 2013 and 2012 was $0.18 and $0.15, respectively. | |||||||||||||||||
As of December 31, 2013, the unamortized compensation expense related to outstanding unvested options was approximately $150,000 with a weighted average remaining requisite service period of 2.31 years. The Company expects to amortize this expense over the remaining requisite service period of these stock options. A deferred tax asset generally would be recorded related to the expected future tax benefit from the exercise of the non-qualified stock options. However, due to a history of net operating losses, a full valuation allowance has been recorded related to the tax benefit for non-qualified stock options. | |||||||||||||||||
Restricted Stock Unit Activity | |||||||||||||||||
Grants of restricted stock units are paid in an equal number of shares of common stock on the vesting date of the award, subject to any deferred payment date that the holder may elect. A stock unit award is paid only to the extent vested. Vesting generally requires the continued employment by the award recipient through the respective vesting date. Restricted stock units outstanding as of December 31, 2013 are not subject to accelerated vesting provisions. Since the restricted stock units are paid in an equal number of shares of common stock without any kind of offsetting payment by the employee, the measurement of cost is based on the quoted market price of the stock at the measurement date which is the date of grant. | |||||||||||||||||
The following table summarizes restricted stock unit activity for the year ended December 31, 2013 and 2012: | |||||||||||||||||
Outstanding Restricted Stock Units | Weighted Average Fair Value per Share | ||||||||||||||||
December 31, 2011 | 49,000 | $ | 0.31 | ||||||||||||||
Granted | 620,000 | – | |||||||||||||||
Released | (44,000 | ) | – | ||||||||||||||
Cancelled | (65,000 | ) | – | ||||||||||||||
December 31, 2012 | 560,000 | $ | 0.14 | ||||||||||||||
Granted | – | – | |||||||||||||||
Released | (373,000 | ) | – | ||||||||||||||
Cancelled | – | – | |||||||||||||||
December 31, 2013 | 187,000 | $ | 0.14 | ||||||||||||||
Balance exercisable at December 31, 2013 | – | ||||||||||||||||
Under the 2010 Plan, employees may elect to have shares of common stock withheld on the vesting date in lieu of the employees paying cash for withholding taxes. As a result of employees making this election, approximately 373,000 restricted stock units vested and approximately 326,000 shares of common stock were issued. | |||||||||||||||||
Warrant Activity | |||||||||||||||||
The following summarizes warrant activity for the year ended December 31, 2013 and 2012: | |||||||||||||||||
Outstanding | Weighted | Weighted | |||||||||||||||
Warrants | Average Exercise | Average | |||||||||||||||
Price per Share | Remaining | ||||||||||||||||
Contractual | |||||||||||||||||
Life (in years) | |||||||||||||||||
Outstanding December 31, 2011 | 4,500,000 | $ | 0.79 | 5.35 | |||||||||||||
Granted | – | – | – | ||||||||||||||
Exercised | – | – | – | ||||||||||||||
Forfeited | – | – | – | ||||||||||||||
Outstanding December 31, 2012 | 4,500,000 | $ | 0.79 | 4.35 | |||||||||||||
Granted | 3,600,000 | 0.4 | – | ||||||||||||||
Exercised | (1,500,000 | ) | 0.37 | – | |||||||||||||
Forfeited | – | – | – | ||||||||||||||
Outstanding December 31, 2013 | 6,600,000 | $ | 0.67 | 4.18 | |||||||||||||
Balance exercisable at December 31, 2013 | 3,000,000 | $ | 0.4 | 3.36 | |||||||||||||
During 2009, the Company issued warrants to purchase an aggregate of 4,500,000 shares of common stock in connection with asset acquisitions of iSports and i-am TV. The fair values of the warrants were approximately $908,000 in aggregate and were determined using the Black-Scholes model using the following weighted-average assumptions: risk-free interest rates of 2.79%; dividend yield of 0%; expected volatility of 78.1%; and a term of 8 years. During the year ended December 31, 2013, the warrants issued in connection with the iSports acquisition (which were warrants to purchase 1,500,000 shares) were exercised on a net-exercise arrangement, resulting in the issuance of approximately 798,000 shares of common stock. | |||||||||||||||||
During 2013, the Company issued warrants to purchase an aggregate of 3,600,000 shares of common stock in connection with a private placement. The fair value of the warrants was approximately $1,379,000 in aggregate and was determined using the Black-Scholes model using the following weighted-average assumptions: risk-free interest rates of 1.06%; dividend yield of 0%; expected volatility of 80.25%; and a term of 5 years. The Company has concluded that these warrants qualify as equity instruments and not liabilities. | |||||||||||||||||
Cumulative Convertible Preferred Stock | |||||||||||||||||
The Company has authorized 10,000,000 shares of preferred stock. The preferred stock may be issued in one or more series. The only series currently designated is a series of 5,000,000 shares of Series A Cumulative Convertible Preferred Stock (Series A Preferred Stock). | |||||||||||||||||
As of December 31, 2013 and 2012, there were 156,000 shares of Series A Preferred Stock issued and outstanding. The Series A Preferred Stock provides for a cumulative annual dividend of 10 cents per share, payable in semi-annual installments in June and December. Dividends may be paid in cash or with shares of common stock. During the years ended December 31, 2013 and 2012, the Company issued approximately 35,000 and 73,000 common shares, respectively, for payment of dividends. | |||||||||||||||||
The Series A Preferred Stock has no voting rights and has a $1.00 per share liquidation preference over common stock. The registered holder has the right at any time to convert shares of Series A Preferred Stock into that number of shares of common stock that equals the number of shares of Series A Preferred Stock that are surrendered for conversion divided by the conversion rate. The conversion rate is subject to adjustment in certain events and is established at the time of each conversion. During the year ended December 31, 2012, 5,000 shares of cumulative convertible preferred stock were converted into approximately 15,000 shares of common stock at a conversion rate of 0.3276. There were no conversions for year ended December 31, 2013. There is no mandatory conversion term, date or any redemption features associated with the Series A Preferred Stock. |
11_Income_Taxes
11. Income Taxes | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
11. Income Taxes | ' | ||||||||||||||||
For each of the years 2013 and 2012, current tax (benefit) provisions and current deferred tax (benefit) provision were recorded as follows: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Current Tax (Provision) Benefit | |||||||||||||||||
Federal | $ | – | $ | – | |||||||||||||
State | (27,000 | ) | 8,000 | ||||||||||||||
Foreign | (2,000 | ) | 27,000 | ||||||||||||||
(29,000 | ) | 35,000 | |||||||||||||||
Deferred Tax (Provision) Benefit | |||||||||||||||||
Federal | – | – | |||||||||||||||
State | (3,000 | ) | 77,000 | ||||||||||||||
Foreign | (14,000 | ) | (29,000 | ) | |||||||||||||
(17,000 | ) | 48,000 | |||||||||||||||
Total Tax (Provision) Benefit | |||||||||||||||||
Federal | – | – | |||||||||||||||
State | (30,000 | ) | 85,000 | ||||||||||||||
Foreign | (16,000 | ) | (2,000 | ) | |||||||||||||
$ | (46,000 | ) | $ | 83,000 | |||||||||||||
The net deferred tax assets and liabilities have been reported in other assets in the consolidated balance sheets at December 31, 2013 and 2012 as follows: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Current | Noncurrent | Current | Noncurrent | ||||||||||||||
Deferred Tax Assets: | |||||||||||||||||
NOL carryforwards | $ | – | $ | 19,406,000 | $ | – | $ | 19,743,000 | |||||||||
UK NOL carryforwards | – | 772,000 | – | 756,000 | |||||||||||||
Capital loss | – | 409,000 | – | 450,000 | |||||||||||||
Compensation and vacation accrual | 150,000 | – | 154,000 | – | |||||||||||||
Operating accruals | 37,000 | 302,000 | 60,000 | 380,000 | |||||||||||||
Deferred revenue | 224,000 | – | – | – | |||||||||||||
Research and experimentation, AMT and foreign tax credits | – | 156,000 | – | 156,000 | |||||||||||||
State Margin Tax Credit | – | 137,000 | – | 140,000 | |||||||||||||
Fixed assets and intangibles | – | 630,000 | – | 844,000 | |||||||||||||
Foreign | 3,000 | – | 3,000 | – | |||||||||||||
Other | 130,000 | 157,000 | 162,000 | 138,000 | |||||||||||||
Total gross deferred tax assets | 544,000 | 21,969,000 | 379,000 | 22,607,000 | |||||||||||||
Valuation allowance | (515,000 | ) | (21,042,000 | ) | (360,000 | ) | (21,715,000 | ) | |||||||||
Net deferred tax assets | 29,000 | 927,000 | 19,000 | 892,000 | |||||||||||||
Deferred Tax Liabilities: | |||||||||||||||||
Capitalized software | – | 843,000 | – | 730,000 | |||||||||||||
Foreign | – | 57,000 | – | 55,000 | |||||||||||||
Deferred revenue | – | – | 23,000 | – | |||||||||||||
Other | 40,000 | – | 74,000 | – | |||||||||||||
Total gross deferred liabilities | 40,000 | 900,000 | 97,000 | 785,000 | |||||||||||||
Net deferred taxes | $ | (11,000 | ) | $ | 27,000 | $ | (78,000 | ) | $ | 107,000 | |||||||
The reconciliation of computed expected income taxes to effective income taxes by applying the federal statutory rate of 34% is as follows: | |||||||||||||||||
For the year ended | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Tax at federal income tax rate | $ | 342,000 | $ | 367,000 | |||||||||||||
State (provision) benefit | (30,000 | ) | 85,000 | ||||||||||||||
Foreign tax differential | 2,000 | (1,000 | ) | ||||||||||||||
Change in valuation allowance | (303,000 | ) | (139,000 | ) | |||||||||||||
Permanent items | (61,000 | ) | (256,000 | ) | |||||||||||||
Other | 4,000 | 27,000 | |||||||||||||||
Total (Provision) Benefit | $ | (46,000 | ) | $ | 83,000 | ||||||||||||
The net change in the total valuation allowance for the year ended December 31, 2013 was an increase of $303,000. The net change in the total valuation allowance for the year ended December 31, 2012 was a decrease of $139,000. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and planning strategies in making this assessment. Based on the level of historical operating results and projections for the taxable income for the future, management has determined that it is more likely than not that the portion of deferred taxes not utilized through the reversal of deferred tax liabilities will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. | |||||||||||||||||
At December 31, 2013, the Company has available net operating loss (“NOL”) carryforwards of approximately $55,581,000 for federal income tax purposes, which will begin to expire in 2017. The NOL carryforwards for state purposes, which will continue expiring in 2014, are approximately $21,401,000. There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state loss carryforwards due to continued operating losses. Further, Section 382 of the Internal Revenue Code imposes limits on the ability to use NOL carryforwards that existed prior to a change in control to offset future taxable income. The Company completed a Section 382 analysis for the period from January 1, 1992 through December 31, 2013 and determined that the Company does not expect to be limited in regards to utilizing the total NOL carryforwards that existed as of December 31, 2013, provided it generates sufficient future earnings prior to the expiration of the NOLs and that future changes in ownership do not trigger a Section 382 limitation. The Company has established a full valuation allowance for substantially all deferred tax assets, including the NOL carryforwards, since the Company could not conclude that it was more likely than not able to generate future taxable income to realize these assets. In addition, the Company has approximately $207,000 of state tax credit tax carryforwards that expire in the years 2013 through 2026. | |||||||||||||||||
The deferred tax assets as of December 31, 2013 include a deferred tax asset of $681,000 representing NOLs arising from the exercise of stock options by Company employees from 2005 and prior years. To the extent the Company realizes any tax benefit for the NOLs attributable to the stock option exercises, such amount would be credited directly to stockholders' equity. | |||||||||||||||||
United States income taxes were not provided on unremitted earnings from non-United States subsidiaries. Such unremitted earnings are considered to be indefinitely reinvested and determination of the amount of taxes that might be paid on these undistributed earnings is not practicable. | |||||||||||||||||
The Company and its subsidiaries are subject to federal income tax as well as income tax of multiple state jurisdictions. With few exceptions, the Company is no longer subject to income tax examination by tax authorities in major jurisdictions for years prior to 2009. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward, and make adjustments up to the amount of the carryforwards. The Company is not currently under examination by the IRS or state taxing authorities. |
12_Commitments
12. Commitments | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||
12. Commitments | ' | ||||||||
Operating Leases | |||||||||
The Company leases office and production facilities and equipment under agreements that expire at various dates through 2018. Certain leases contain renewal provisions and escalating rental clauses and generally require the Company to pay utilities, insurance, taxes and other operating expenses. Lease expense under operating leases totaled $581,000 and $579,000 in 2013 and 2012, respectively. | |||||||||
The estimated aggregate lease payments under operating leases for each of the five succeeding years is as follows: | |||||||||
Years Ending December 31, | Lease | ||||||||
Payment | |||||||||
2014 | $ | 704,000 | |||||||
2015 | 716,000 | ||||||||
2016 | 692,000 | ||||||||
2017 | 626,000 | ||||||||
Thereafter | 580,000 | ||||||||
Total | $ | 3,318,000 | |||||||
Sublease | |||||||||
In February 2013, the Company began subleasing approximately 2,700 square feet of its office space. The term of the sublease expires in July 2014. The tenants will not be renewing the sublease at the end of its term. Total sublease income for the year ended December 31, 2013 was approximately $44,000. Total estimated aggregate sublease income for the year ended December 31, 2014 is approximately $31,000. | |||||||||
Capital Leases | |||||||||
As of December 31, 2013 and 2012, property held under current capital leases was as follows: | |||||||||
For the Years Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Broadcast equipment | $ | – | $ | 277,000 | |||||
Other equipment | 84,000 | 69,000 | |||||||
84,000 | 346,000 | ||||||||
Accumulated depreciation | (21,000 | ) | (217,000 | ) | |||||
Total | $ | 63,000 | $ | 129,000 | |||||
Total depreciation expense under capital leases was $83,000 and $271,000 for the years ended December 31, 2013 and 2012, respectively. | |||||||||
As of December 31, 2013, future minimum payments under all capital leases are as follows: | |||||||||
Years Ending December 31, | Lease | ||||||||
Payment | |||||||||
2014 | $ | 32,000 | |||||||
2015 | 31,000 | ||||||||
2016 | 24,000 | ||||||||
2017 | 7,000 | ||||||||
Thereafter | – | ||||||||
Total minimum payments | 94,000 | ||||||||
Less amounts representing interest | (11,000 | ) | |||||||
Present value of net minimum payments | 83,000 | ||||||||
Less current portion | (25,000 | ) | |||||||
Long-term capital lease obligations | $ | 58,000 | |||||||
Notes Payable | |||||||||
In May 2013, the Company entered into a financing agreement with a lender under which the Company may borrow up to $500,000 to purchase certain equipment. In August 2013, the maximum amount the Company may borrow was increased to $1,000,000, and in December 2013, the maximum amount the Company may borrow was further increased to $3,000,000. The Company may borrow amounts in tranches as needed. Each tranche bears interest at 8.32% per annum and is payable in 36 equal monthly installments. The Company granted the lender a first security interest in the equipment purchased with the funds borrowed under the agreement. Through December 31, 2013, the Company borrowed approximately $1,623,000. As of December 31, 2013, $1,564,000 remained outstanding, which reflects payments made through December 31, 2013. | |||||||||
In July 2011, the Company entered into an equipment financing agreement with a bank in the amount of $123,000, which is recorded in short-term and long-term notes payable on the accompanying consolidated balance sheet. The amounts borrowed were used to finance certain equipment purchases and other services related to the relocation of the Company’s Carlsbad, California office. The amount borrowed bears interest at 5.85% per annum and is collateralized by a first priority security interest in the equipment purchased. The amount borrowed is payable over a 36 month period in equal payments of $3,705, which includes interest, until fully paid in August 2014. As of December 31, 2013, approximately $29,000 remained outstanding. | |||||||||
Future minimum payments under notes payable as of December 31, 2013 are as follows: | |||||||||
Years Ending December 31, | Payment | ||||||||
2014 | $ | 713,000 | |||||||
2015 | 547,000 | ||||||||
2016 | 498,000 | ||||||||
2017 | 13,000 | ||||||||
Thereafter | – | ||||||||
Total minimum payments | 1,771,000 | ||||||||
Less amounts representing interest | (178,000 | ) | |||||||
Total notes payable | 1,593,000 | ||||||||
Less current portion | (631,000 | ) | |||||||
Long-term portion | $ | 962,000 | |||||||
Interest expense related to notes payable for the years ended December 31, 2013 and 2012 was $9,000 and $5,000, respectively. | |||||||||
13_Contingencies
13. Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
13. Contingencies | ' |
The Company is subject to litigation from time to time in the ordinary course of its business. There can be no assurance that any or all of the following claims will be decided in the Company’s favor and the Company is not insured against all claims made. During the pendency of such claims, the Company will continue to incur the costs of its legal defense. Other than set forth below, there is no material litigation pending or threatened against the Company. | |
Sales and Use Tax | |
From time to time, state tax authorities will make inquiries as to whether or not a portion of the Company’s services require the collection of sales and use taxes from customers in those states. Many states have expanded their interpretation of their sales and use tax statutes to subject more activities to tax. The Company evaluates such inquiries on a case-by-case basis and has favorably resolved the majority of these tax issues in the past without any material adverse consequences. | |
The Company is involved in ongoing sales tax inquiries with certain states and provinces. As a result of those inquiries, the Company recorded a total net liability of $27,000 and $70,000 as of December 31, 2013 and 2012, respectively, which is included in the sales taxes payable balance in the accompanying consolidated balance sheets. Based on the guidance set forth by ASC No. 450, Contingencies, management has deemed the likelihood as reasonably possible that it will be required to pay all or part of these assessments. | |
14_Accumulated_Other_Comprehen
14. Accumulated Other Comprehensive Income | 12 Months Ended |
Dec. 31, 2013 | |
Shareholders' Equity: | ' |
14. Accumulated Other Comprehensive Income | ' |
Accumulated other comprehensive income includes the accumulated gains or losses from foreign currency translation adjustments. The Company translated the assets and liabilities of its Canadian statement of financial position into U.S. dollars using the period end exchange rate. Revenue and expenses were translated using the weighted-average exchange rates for the reporting period. As of December 31, 2013 and 2012, $631,000 and $768,000 of foreign currency translation adjustments were recorded in accumulated other comprehensive income, respectively. |
15_Geographical_Information
15. Geographical Information | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
15. Geographical Information | ' | ||||||||
Geographic breakdown of the Company’s revenue for the last two fiscal years were as follows: | |||||||||
For the years ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
United States | $ | 22,480,000 | $ | 22,551,000 | |||||
Canada | 1,269,000 | 1,513,000 | |||||||
Total revenue | $ | 23,749,000 | $ | 24,064,000 | |||||
Geographic breakdown of the Company’s long-term tangible assets for the last two fiscal years were as follows: | |||||||||
As of December 31, | |||||||||
2013 | 2012 | ||||||||
United States | $ | 3,220,000 | $ | 3,767,000 | |||||
Canada | 17,000 | 16,000 | |||||||
Total assets | $ | 3,237,000 | $ | 3,783,000 | |||||
16_Retirement_Savings_Plan
16. Retirement Savings Plan | 12 Months Ended |
Dec. 31, 2013 | |
Postemployment Benefits [Abstract] | ' |
16. Retirement Savings Plan | ' |
In 1994, the Company established a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, which allows employees who have completed at least one month of service and have reached age 18 to defer up to 50% of their pay on a pre-tax basis. The Company does not contribute a match to the employees’ contribution. |
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies and Estimates (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Consolidation | ' | ||
Consolidation—The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). All significant intercompany balances and transactions have been eliminated in consolidation. | |||
Use of Estimates | ' | ||
Use of Estimates—Preparing the Company’s consolidated financial statements requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to deferred costs and revenues; depreciation of broadcast equipment; allowance for doubtful accounts; investments; stock-based compensation assumptions; impairment of software development costs, intangible assets and goodwill, and broadcast equipment; contingencies, including the reserve for sales tax inquiries; the provision for income taxes, including the valuation allowance; and purchase price allocations related to acquisitions. The Company bases its estimates on a combination of historical experience and various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about significant carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates. | |||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents—Accounting Standards Codification (“ASC”) No. 230, Statement of Cash Flows, defines “cash and cash equivalents” as any short-term, highly liquid investment that is both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. For the purpose of financial statement presentation, the Company has applied the provisions of ASC No. 230, as it considers all highly liquid investment instruments with original maturities of three months or less, or any investment redeemable without penalty or loss of interest, to be cash equivalents. | |||
Capital Resources | ' | ||
Capital Resources—The Company is dependent upon cash on hand and cash flow from operations to meet its liquidity needs. The Company has a credit facility with a lender under which the Company may borrow up to $3,000,000 for the purchase of certain capital equipment. As of December 31, 2013, the Company borrowed approximately $1,623,000, which is recorded in short-term and long-term notes payable on the accompanying consolidated balance sheet. As of December 31, 2013, $1,564,000 remained outstanding. The Company believes existing cash and cash equivalents, funds generated from operations, the proceeds received from the private placement completed in November 2013 (See Note 10) and the remaining availability on its credit facility will be sufficient to meet its operating cash requirements and to fulfill its debt obligations for at least the next twelve months. In order to execute its operating and strategic plan and to position the Company to better take advantage of market opportunities and opportunities for growth, the Company is evaluating additional financing alternatives, including raising additional capital through public or private equity or debt financing. If net cash provided by operating activities and its cash and cash equivalents on hand are not sufficient to meet future cash requirements, the Company may be required to reduce planned capital expenses, reduce operational cash uses, sell assets or seek financing. Any actions the Company may undertake to reduce planned capital purchases, reduce expenses, or generate proceeds from the sale of assets may be insufficient to cover shortfalls in available funds. If the Company requires additional capital, it may be unable to secure additional financing on terms that are acceptable to the Company, or at all. | |||
Allowances for Doubtful Accounts | ' | ||
Allowance for Doubtful Accounts—The Company maintains allowances for doubtful accounts for estimated losses resulting from nonpayment by its customers. The Company reserves for all accounts that have been suspended or terminated from its Buzztime network services and for customers with balances that are greater than a predetermined number of days past due. The Company analyzes historical collection trends, customer concentrations and creditworthiness, economic trends and anticipated changes in customer payment patterns when evaluating the adequacy of its allowance for doubtful accounts for specific and general risks. Additional reserves may also be established if specific customers’ balances are identified as potentially uncollectible. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. | |||
Broadcast Equpment and Fixed Assets | ' | ||
Broadcast Equipment and Fixed Assets—Broadcast equipment and fixed assets are recorded at cost. Equipment under capital leases is recorded at the present value of future minimum lease payments. Depreciation of broadcast equipment and fixed assets is computed using the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements and fixed assets under capital leases is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease period. | |||
The Company incurs a relatively significant level of depreciation expense in relation to its operating income. The amount of depreciation expense in any fiscal year is largely related to the estimated life of handheld wireless Playmaker devices and associated electronics and the computers located at our network subscribers’ sites. The Classic Playmakers are depreciated over a five-year life, the BEOND Playmakers are depreciated over three-year life and the associated electronics and computers are depreciated over two to four years. The depreciable life of these assets was determined based on the shorter of the contractual capital lease period or their estimated useful life, which considers anticipated technology changes. If the Playmakers and associated electronics and the computers turn out to have longer lives, on average, than estimated, then depreciation expense would be significantly reduced in those future periods. Conversely, if the Playmakers and associated electronics and the computers turn out to have shorter lives, on average, than estimated, then depreciation expense would be significantly increased in those future periods. | |||
Goodwill and Other Intangible Assets | ' | ||
Goodwill and Other Intangible Assets—Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a purchase combination determined to have an indefinite useful life are not amortized, but instead are assessed quarterly for impairment based on qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the goodwill is less than its carrying amount. Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events. If after assessing the totality of events or circumstances the Company determines it is not more likely than not that the goodwill is less than its carrying amount, then performing the two-step impairment test outlined in ASC No. 350 is unnecessary. During the year ended December 31, 2013, the Company performed the annual qualitative assessment of its goodwill related to NTN Canada, Inc., and determined that there were no indications of impairment. | |||
ASC No. 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC No. 360, Property, Plant and Equipment. In accordance with ASC No. 360, the Company assesses potential impairments of its long-lived assets whenever events or changes in circumstances indicate the asset’s carrying value may not be recoverable. An impairment loss would be recognized when the carrying amount of a long-lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. The Company performed its annual review of its other intangible assets and determined that there were no indications of impairment for the year ended December 31, 2013. | |||
Assessments of Functional Currencies | ' | ||
Assessments of Functional Currencies—The United States dollar is the Company’s functional currency, except for its operations in Canada where the functional currency is the Canadian dollar. The financial position and results of operations of the Canadian subsidiary is measured using the foreign subsidiary’s local currency as the functional currency. In accordance with ASC No. 830, Foreign Currency Matters, revenues and expenses of its foreign subsidiary have been translated into U.S. dollars at weighted average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded as a separate component of shareholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. For the years ended December 31, 2013 and 2012, the Company recorded $24,000 of foreign currency transaction gains and $20,000 in foreign currency transaction losses, respectively, due to settlements of intercompany transactions, re-measurement of intercompany balances with its Canadian subsidiary and other non-functional currency denominated transactions, which are included in other income in the accompanying statements of operations. Fluctuations in the rate of exchange between the U.S. dollar and Canadian dollar may affect the Company’s results of operations and period-to-period comparisons of its operating results. The Company does not currently engage in hedging or similar transactions to reduce these risks. For the year ended December 31, 2013, the net impact to the Company’s results of operations from the effect of exchange rate fluctuations was immaterial. | |||
Revenue Recognition | ' | ||
Revenue Recognition—The Company recognizes revenue from recurring service fees earned from its network subscribers, Stump! Trivia events, advertising revenues, leased equipment and distribution and licensing fees from its Buzztime-branded content delivered primarily through its interactive consumer platforms. To the extent its arrangements contain multiple deliverables the Company evaluates the criteria in ASC No. 605, Revenue Recognition, to determine whether such deliverables represent separate units of accounting. In order to be considered a separate unit of accounting, the delivered items in an arrangement must have stand-alone value to the customer and objective and reliable evidence of fair value must exist for any undelivered elements. The Company’s arrangements for the transmission of the Buzztime network contain two deliverables: the installation of its equipment and the transmission of its network content for which the Company receives monthly subscription fees. As the installation deliverable does not have stand-alone value to the customer, it does not represent a separate unit of accounting. Therefore, for the Classic product, all installation fees received are deferred and recognized as revenue on a straight-line basis over the estimated life of the customer relationship. Because deployment of the BEOND system is so new, the Company has not yet established an estimated life of a BEOND customer, and therefore, it is deferring and recognizing installation fees as revenue on a straight-line basis over the customer contract term. All installation fees not recognized in revenue have been recorded as deferred revenue in the accompanying consolidated balance sheets. | |||
In addition, the direct expenses of the installation, commissions, setup and training are deferred and amortized on a straight-line basis and are classified as deferred costs on the accompanying consolidated balance sheets. For these direct expenses that are associated with the Classic product, the amortization period approximates the estimated life of the customer relationship for deferred direct costs that are of an amount that is less than or equal to the deferred revenue for the related contract. For costs that exceed the deferred revenue, the amortization period is the initial term of the contract, in accordance with ASC No. 605, which is generally one year. For direct costs associated with the BEOND product, the amortization period approximates the life of the contract. | |||
The Company evaluated its lease transactions in accordance with ASC No. 840, Leases, to determine classification of the leases against the following criteria: | |||
· | The lease transfers ownership of the property to the lessee by the end of the lease term; | ||
· | There is a bargain purchase option; | ||
· | The lease term is equal to or greater than 75% of the economic life of the equipment; or | ||
· | The present value of the minimum payments is equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. | ||
Because the Company’s current leasing agreement meets at least one of the criteria above and collectability of the minimum lease payments is reasonably assured and there are no important uncertainties surrounding the amount of reimbursable costs yet to be incurred under the lease, the Company classifies the lease as a sales-type lease, and it recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed and determinable and collectability is reasonably assured. | |||
Revenues from advertising, Stump! Trivia events and royalties are recognized when all material services or conditions relating to the transaction have been performed or satisfied. | |||
The Company has arrangements with certain third parties to share in revenue generated from some of its products and services. The Company evaluates recognition of the associated revenue in accordance with ASC No. 605-45, Revenue Recognition, Principal Agent Considerations. When indicators suggest that the Company is functioning as a principal, it records revenue gross and the corresponding amounts paid to third parties are recorded as direct expense. Conversely, when indicators suggest that the Company is functioning as an agent, it records revenue net of amounts paid to third parties. | |||
Software Development Costs | ' | ||
Software Development Costs—The Company capitalizes costs related to developing certain software products in accordance with ASC No. 350. Amortization expense relating to capitalized software development costs totaled $864,000 and $650,000 for the years ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, approximately $934,000 and $156,000, respectively, of capitalized software costs were not subject to amortization as the development of various software projects was not complete. | |||
The Company performed its annual review of software development projects for the years ended December 31, 2013 and 2012, determined to abandon various software development projects that it concluded were no longer a current strategic fit or for which the Company determined that the marketability of the content had decreased due to obtaining additional information regarding the specific industry for which the content was intended. As a result, an impairment of $230,000 and $7,000 was recognized for the years ended December 31, 2013 and 2012, respectively, which was included in our selling, general and administrative expenses. | |||
Advertising Costs | ' | ||
Advertising Costs – Marketing-related advertising costs are expensed as incurred and amounted to $9,000 and $15,000 for the years ended December 31, 2013 and 2012, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. | |||
Shipping and Handling Costs | ' | ||
Shipping and Handling Costs—Shipping and handling costs are included in direct operating costs in the accompanying consolidated statements of operations and are expensed as incurred. | |||
Stock-Based Compensation | ' | ||
Stock-Based Compensation— The Company estimates the fair value of its stock options using a Black-Scholes option pricing model, consistent with the provisions of ASC No. 718, Compensation – Stock Compensation and ASC No. 505-50, Equity – Equity-Based Payments to Non-Employees.. The fair value of stock options granted is recognized to expense over the requisite service period. Stock-based compensation expense for share-based payment awards to employees is recognized using the straight-line single-option method. Stock-based compensation expense for share-based payment awards to non-employees is recorded at its fair value on the grant date and is periodically re-measured as the underlying awards vest. Stock-based compensation expense is reported as selling, general and administrative based upon the departments to which substantially all of the associated employees report. | |||
Income Taxes | ' | ||
Income Taxes—Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. | |||
ASC No. 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. A tax position that meets the “more-likely-than-not” criterion shall be measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement. The Company reviewed its tax positions and determined that an adjustment to the tax provision is not considered necessary nor is a reserve for income taxes required. | |||
Earnings Per Share | ' | ||
Earnings Per Share—Basic and diluted loss per common share have been computed by dividing the losses applicable to common stock by the weighted average number of common shares outstanding. The Company’s basic and fully diluted EPS calculation are the same since the increased number of shares that would be included in the diluted calculation from assumed exercise of common stock equivalents would be anti-dilutive to the net loss in each of the years shown in the consolidated financial statements. | |||
Segment Reporting | ' | ||
Segment Reporting—In accordance with ASC No. 280, Segment Reporting, the Company has determined that it operates as one operating segment. Decisions regarding the Company’s overall operating performance and allocation of our resources are assessed on a consolidated basis. | |||
Recent Accounting Pronouncements | ' | ||
Recent Accounting Pronouncements | |||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740). This update improves the reporting for unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The update is expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The update is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company is January 1, 2014. The Company does not anticipate that adopting this update will have a material impact on its consolidated financial statements. | |||
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Topic 205) - Liquidation Basis of Accounting. This update addresses the requirements and methods of applying the liquidation basis of accounting and the disclosure requirements within ASC Topic 205 for the purpose of providing consistency among liquidating entities reporting under U.S. GAAP. Generally, this update provides guidance for the preparation of financial statements and disclosures when liquidation is imminent. This update is effective for periods beginning after December 15, 2013, which for the Company is January 1, 2014. The Company does not anticipate that adopting this update will have a material impact on its consolidated financial statements. | |||
In March 2013, FASB issued ASU No. 2013-05, Foreign Currency Matters. The amendments in this update resolve the diversity in practice about whether current literature applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in this update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This update is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013, which for the Company is January 1, 2014. The Company does not anticipate that adopting this update will have a material impact on our consolidated financial statements. |
3_Prepaid_Expenses_and_Other_C1
3. Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid expenses and other current assets | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Site equipment to be installed | $ | 1,069,000 | $ | 77,000 | |||||
Deposits | 413,000 | 437,000 | |||||||
Prepaid expenses | 340,000 | 384,000 | |||||||
Total | $ | 1,822,000 | $ | 898,000 |
4_Broadcast_Equipment_and_Fixe1
4. Broadcast Equipment and Fixed Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and equipment table | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Broadcast equipment | $ | 18,699,000 | $ | 18,148,000 | |||||
Machinery and equipment | 1,940,000 | 2,175,000 | |||||||
Furniture and fixtures | 185,000 | 641,000 | |||||||
Leasehold improvements | 610,000 | 610,000 | |||||||
Other equipment | 24,000 | 24,000 | |||||||
21,458,000 | 21,598,000 | ||||||||
Accumulated depreciation | (18,221,000 | ) | (17,815,000 | ) | |||||
Total | $ | 3,237,000 | $ | 3,783,000 |
5_Goodwill_and_Other_Intangibl1
5. Goodwill and Other Intangible Assets (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Schedule of intangible assets | ' | ||||||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||||||||||
Gross Carrying | Accumulated | Net Book | Gross Carrying | Accumulated | Net Book | ||||||||||||||||||||
Value | Amortization | Value | Value | Amortization | Value | ||||||||||||||||||||
Acquired customer lists | $ | 545,000 | $ | (425,000 | ) | $ | 120,000 | $ | 545,000 | $ | (174,000 | ) | $ | 371,000 | |||||||||||
Acquired technology | 599,000 | (559,000 | ) | 40,000 | 599,000 | (440,000 | ) | 159,000 | |||||||||||||||||
Trivia database | 417,000 | (417,000 | ) | – | 448,000 | (405,000 | ) | 43,000 | |||||||||||||||||
Acquired subscription customers | 874,000 | (874,000 | ) | – | 874,000 | (868,000 | ) | 6,000 | |||||||||||||||||
Trademarks and trademark licenses | 67,000 | (67,000 | ) | – | 67,000 | (67,000 | ) | – | |||||||||||||||||
Acquired advertising customers | 302,000 | (302,000 | ) | – | 302,000 | (302,000 | ) | – | |||||||||||||||||
Total | $ | 2,804,000 | $ | (2,644,000 | ) | $ | 160,000 | $ | 2,835,000 | $ | (2,256,000 | ) | $ | 579,000 | |||||||||||
Amortization schedule | ' | ||||||||||||||||||||||||
Year Ending | Estimated Aggregate | ||||||||||||||||||||||||
Amortization Expense | |||||||||||||||||||||||||
2014 | $ | 160,000 | |||||||||||||||||||||||
Thereafter | – | ||||||||||||||||||||||||
Total | $ | 160,000 |
7_Accrued_Compensation_Tables
7. Accrued Compensation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Compensation Related Costs [Abstract] | ' | ||||||||
Schedule of accrued compensation | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Accrued vacation | $ | 439,000 | $ | 423,000 | |||||
Accrued salaries | 137,000 | 111,000 | |||||||
Accrued bonuses | 45,000 | 33,000 | |||||||
Accrued commissions | 26,000 | 31,000 | |||||||
Total accrued compensation | $ | 647,000 | $ | 598,000 |
10_Stockholders_Equity_Tables
10. Stockholders' Equity (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Shareholders' Equity: | ' | ||||||||||||||||
Assumptions used | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average risk-free rate | 0.60% | 0.53% | |||||||||||||||
Weighted average volatility | 79.82% | 95.21% | |||||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||||||
Expected life | 4.80 years | 5.71 years | |||||||||||||||
Stock option activity table | ' | ||||||||||||||||
Outstanding | Weighted | Weighted | Aggregate Intrinsic | ||||||||||||||
Options | Average Exercise | Average | Value | ||||||||||||||
Price per Share | Remaining | ||||||||||||||||
Contractual | |||||||||||||||||
Life (in years) | |||||||||||||||||
Outstanding December 31, 2011 | 4,314,000 | $ | 0.59 | 7.74 | $ | 2,000 | |||||||||||
Granted | 452,000 | 0.15 | – | – | |||||||||||||
Cancelled | (1,351,000 | ) | 0.51 | – | – | ||||||||||||
Forfeited | (1,596,000 | ) | 0.45 | – | – | ||||||||||||
Expired | (5,000 | ) | 0.98 | – | – | ||||||||||||
Outstanding December 31, 2012 | 1,814,000 | 0.66 | 6.37 | 25,000 | |||||||||||||
Granted | 1,280,000 | 0.27 | – | – | |||||||||||||
Exercised | (30,000 | ) | 0.17 | – | – | ||||||||||||
Cancelled | (245,000 | ) | 0.49 | – | – | ||||||||||||
Forfeited | (102,000 | ) | 0.19 | – | – | ||||||||||||
Expired | (53,000 | ) | 1.09 | – | – | ||||||||||||
Outstanding December 31, 2013 | 2,664,000 | $ | 0.5 | 7.14 | $ | 706,000 | |||||||||||
Options vested and exercisable at December 31, 2013 | 1,315,000 | $ | 0.76 | 5.14 | $ | 201,000 | |||||||||||
Restricted stock activity | ' | ||||||||||||||||
Outstanding Restricted Stock Units | Weighted Average Fair Value per Share | ||||||||||||||||
December 31, 2011 | 49,000 | $ | 0.31 | ||||||||||||||
Granted | 620,000 | – | |||||||||||||||
Released | (44,000 | ) | – | ||||||||||||||
Cancelled | (65,000 | ) | – | ||||||||||||||
December 31, 2012 | 560,000 | $ | 0.14 | ||||||||||||||
Granted | – | – | |||||||||||||||
Released | (373,000 | ) | – | ||||||||||||||
Cancelled | – | – | |||||||||||||||
December 31, 2013 | 187,000 | $ | 0.14 | ||||||||||||||
Balance exercisable at December 31, 2013 | – | ||||||||||||||||
Warrant activity table | ' | ||||||||||||||||
Outstanding | Weighted | Weighted | |||||||||||||||
Warrants | Average Exercise | Average | |||||||||||||||
Price per Share | Remaining | ||||||||||||||||
Contractual | |||||||||||||||||
Life (in years) | |||||||||||||||||
Outstanding December 31, 2011 | 4,500,000 | $ | 0.79 | 5.35 | |||||||||||||
Granted | – | – | – | ||||||||||||||
Exercised | – | – | – | ||||||||||||||
Forfeited | – | – | – | ||||||||||||||
Outstanding December 31, 2012 | 4,500,000 | $ | 0.79 | 4.35 | |||||||||||||
Granted | 3,600,000 | 0.4 | – | ||||||||||||||
Exercised | (1,500,000 | ) | 0.37 | – | |||||||||||||
Forfeited | – | – | – | ||||||||||||||
Outstanding December 31, 2013 | 6,600,000 | $ | 0.67 | 4.18 | |||||||||||||
Balance exercisable at December 31, 2013 | 3,000,000 | $ | 0.4 | 3.36 |
11_Income_Taxes_Tables
11. Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of current and deferred income tax provision (benefit) | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Current Tax (Provision) Benefit | |||||||||||||||||
Federal | $ | – | $ | – | |||||||||||||
State | (27,000 | ) | 8,000 | ||||||||||||||
Foreign | (2,000 | ) | 27,000 | ||||||||||||||
(29,000 | ) | 35,000 | |||||||||||||||
Deferred Tax (Provision) Benefit | |||||||||||||||||
Federal | – | – | |||||||||||||||
State | (3,000 | ) | 77,000 | ||||||||||||||
Foreign | (14,000 | ) | (29,000 | ) | |||||||||||||
(17,000 | ) | 48,000 | |||||||||||||||
Total Tax (Provision) Benefit | |||||||||||||||||
Federal | – | – | |||||||||||||||
State | (30,000 | ) | 85,000 | ||||||||||||||
Foreign | (16,000 | ) | (2,000 | ) | |||||||||||||
$ | (46,000 | ) | $ | 83,000 | |||||||||||||
Schedule of deferred tax assets and liabilities | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Current | Noncurrent | Current | Noncurrent | ||||||||||||||
Deferred Tax Assets: | |||||||||||||||||
NOL carryforwards | $ | – | $ | 19,406,000 | $ | – | $ | 19,743,000 | |||||||||
UK NOL carryforwards | – | 772,000 | – | 756,000 | |||||||||||||
Capital loss | – | 409,000 | – | 450,000 | |||||||||||||
Compensation and vacation accrual | 150,000 | – | 154,000 | – | |||||||||||||
Operating accruals | 37,000 | 302,000 | 60,000 | 380,000 | |||||||||||||
Deferred revenue | 224,000 | – | – | – | |||||||||||||
Research and experimentation, AMT and foreign tax credits | – | 156,000 | – | 156,000 | |||||||||||||
State Margin Tax Credit | – | 137,000 | – | 140,000 | |||||||||||||
Fixed assets and intangibles | – | 630,000 | – | 844,000 | |||||||||||||
Foreign | 3,000 | – | 3,000 | – | |||||||||||||
Other | 130,000 | 157,000 | 162,000 | 138,000 | |||||||||||||
Total gross deferred tax assets | 544,000 | 21,969,000 | 379,000 | 22,607,000 | |||||||||||||
Valuation allowance | (515,000 | ) | (21,042,000 | ) | (360,000 | ) | (21,715,000 | ) | |||||||||
Net deferred tax assets | 29,000 | 927,000 | 19,000 | 892,000 | |||||||||||||
Deferred Tax Liabilities: | |||||||||||||||||
Capitalized software | – | 843,000 | – | 730,000 | |||||||||||||
Foreign | – | 57,000 | – | 55,000 | |||||||||||||
Deferred revenue | – | – | 23,000 | – | |||||||||||||
Other | 40,000 | – | 74,000 | – | |||||||||||||
Total gross deferred liabilities | 40,000 | 900,000 | 97,000 | 785,000 | |||||||||||||
Net deferred taxes | $ | (11,000 | ) | $ | 27,000 | $ | (78,000 | ) | $ | 107,000 | |||||||
Reconciliation of expected income taxes | ' | ||||||||||||||||
For the year ended | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Tax at federal income tax rate | $ | 342,000 | $ | 367,000 | |||||||||||||
State (provision) benefit | (30,000 | ) | 85,000 | ||||||||||||||
Foreign tax differential | 2,000 | (1,000 | ) | ||||||||||||||
Change in valuation allowance | (303,000 | ) | (139,000 | ) | |||||||||||||
Permanent items | (61,000 | ) | (256,000 | ) | |||||||||||||
Other | 4,000 | 27,000 | |||||||||||||||
Total (Provision) Benefit | $ | (46,000 | ) | $ | 83,000 |
12_Commitments_Tables
12. Commitments (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||
Schedule of operating lease commitments | ' | ||||||||
Years Ending December 31, | Lease | ||||||||
Payment | |||||||||
2014 | $ | 704,000 | |||||||
2015 | 716,000 | ||||||||
2016 | 692,000 | ||||||||
2017 | 626,000 | ||||||||
Thereafter | 580,000 | ||||||||
Total | $ | 3,318,000 | |||||||
Property held under capital leases | ' | ||||||||
For the Years Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Broadcast equipment | $ | – | $ | 277,000 | |||||
Other equipment | 84,000 | 69,000 | |||||||
84,000 | 346,000 | ||||||||
Accumulated depreciation | (21,000 | ) | (217,000 | ) | |||||
Total | $ | 63,000 | $ | 129,000 | |||||
Schedule of future minimum capital lease payments | ' | ||||||||
Years Ending December 31, | Lease | ||||||||
Payment | |||||||||
2014 | $ | 32,000 | |||||||
2015 | 31,000 | ||||||||
2016 | 24,000 | ||||||||
2017 | 7,000 | ||||||||
Thereafter | – | ||||||||
Total minimum payments | 94,000 | ||||||||
Less amounts representing interest | (11,000 | ) | |||||||
Present value of net minimum payments | 83,000 | ||||||||
Less current portion | (25,000 | ) | |||||||
Long-term capital lease obligations | $ | 58,000 | |||||||
Schedule of future minimum payments of notes payable | ' | ||||||||
Years Ending December 31, | Payment | ||||||||
2014 | $ | 713,000 | |||||||
2015 | 547,000 | ||||||||
2016 | 498,000 | ||||||||
2017 | 13,000 | ||||||||
Thereafter | – | ||||||||
Total minimum payments | 1,771,000 | ||||||||
Less amounts representing interest | (178,000 | ) | |||||||
Total notes payable | 1,593,000 | ||||||||
Less current portion | (631,000 | ) | |||||||
Long-term portion | $ | 962,000 |
15_Geographical_Information_Ta
15. Geographical Information (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Revenues geographic breakdown | ' | ||||||||
Geographic breakdown of the Company’s revenue for the last two fiscal years were as follows: | |||||||||
For the years ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
United States | $ | 22,480,000 | $ | 22,551,000 | |||||
Canada | 1,269,000 | 1,513,000 | |||||||
Total revenue | $ | 23,749,000 | $ | 24,064,000 | |||||
Asset geographic breakdown | ' | ||||||||
As of December 31, | |||||||||
2013 | 2012 | ||||||||
United States | $ | 3,220,000 | $ | 3,767,000 | |||||
Canada | 17,000 | 16,000 | |||||||
Total assets | $ | 3,237,000 | $ | 3,783,000 |
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Accounting Policies [Abstract] | ' | ' |
Credit line borrowing capacity | $3,000,000 | ' |
Credit line amount outstanding | 1,564,000 | ' |
Foreign currency transaction gains/losses | 24,000 | -20,000 |
Amortization expense for capitalized software development | 864,000 | 650,000 |
Capitalized software costs not subject to amorization | 934,000 | 156,000 |
Software impairment | 230,000 | 7,000 |
Advertising costs | $9,000 | $15,000 |
3_Prepaid_Expenses_and_Other_C2
3. Prepaid Expenses and Other Current Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Prepaid Expense and Other Assets [Abstract] | ' | ' |
Site equipment to be installed | $1,069,000 | $77,000 |
Deposits | 413,000 | 437,000 |
Prepaid expenses | 340,000 | 384,000 |
Total prepaid expenses and other current assets | $1,822,000 | $898,000 |
4_Broadcast_Equipment_and_Fixe2
4. Broadcast Equipment and Fixed Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property and equipment, gross | $21,458,000 | $21,598,000 |
Accumulated depreciation | -18,221,000 | -17,815,000 |
Property and equipment, net | 3,237,000 | 3,783,000 |
Broadcast Equipment [Member] | ' | ' |
Property and equipment, gross | 18,699,000 | 18,148,000 |
Machinery and Equipment [Member] | ' | ' |
Property and equipment, gross | 1,940,000 | 2,175,000 |
Furniture and Fixtures [Member] | ' | ' |
Property and equipment, gross | 185,000 | 641,000 |
Leasehold Improvements [Member] | ' | ' |
Property and equipment, gross | 610,000 | 610,000 |
Other Equipment [Member] | ' | ' |
Property and equipment, gross | $24,000 | $24,000 |
4_Broadcast_Equipment_and_Fixe3
4. Broadcast Equipment and Fixed Assets (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation expense | $1,567,000 | $1,851,000 |
5_Goodwill_and_Other_Intangibl2
5. Goodwill and Other Intangible Assets (Details-Intangible Assets) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Gross Carrying Value | $2,804,000 | $2,835,000 |
Accumulated Amortization | -2,644,000 | -2,256,000 |
Net Book Value | 160,000 | 579,000 |
Acquired Customer Lists | ' | ' |
Gross Carrying Value | 545,000 | 545,000 |
Accumulated Amortization | -425,000 | -174,000 |
Net Book Value | 120,000 | 371,000 |
Acquired Technology | ' | ' |
Gross Carrying Value | 599,000 | 599,000 |
Accumulated Amortization | -559,000 | -440,000 |
Net Book Value | 40,000 | 159,000 |
Trivia Database | ' | ' |
Gross Carrying Value | 417,000 | 448,000 |
Accumulated Amortization | -417,000 | -405,000 |
Net Book Value | 0 | 43,000 |
Acquired Subscription Customers | ' | ' |
Gross Carrying Value | 874,000 | 874,000 |
Accumulated Amortization | -874,000 | -868,000 |
Net Book Value | 0 | 6,000 |
Trademarks And Trademark Licenses | ' | ' |
Gross Carrying Value | 67,000 | 67,000 |
Accumulated Amortization | -67,000 | -67,000 |
Net Book Value | 0 | 0 |
Acquired Advertising Customers | ' | ' |
Gross Carrying Value | 302,000 | 302,000 |
Accumulated Amortization | -302,000 | -302,000 |
Net Book Value | $0 | $0 |
5_Goodwill_and_Other_Intangibl3
5. Goodwill and Other Intangible Assets (Details-Amortization schedule) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
2014 | $160,000 | ' |
Thereafter | 0 | ' |
Total amortization expense | $160,000 | $579,000 |
5_Goodwill_and_Other_Intangibl4
5. Goodwill and Other Intangible Assets (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Weighted average remaining useful life of intangibles | '8 months 12 days | ' |
Amortization expense | $418,000 | $378,000 |
7_Accrued_Compensation_Details
7. Accrued Compensation (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Payables and Accruals [Abstract] | ' | ' |
Accrued vacation | $439,000 | $423,000 |
Accrued salaries | 137,000 | 111,000 |
Accrued bonuses | 45,000 | 33,000 |
Accrued commissions | 26,000 | 31,000 |
Total accrued compensation | $647,000 | $598,000 |
8_Concentrations_of_Risk_Detai
8. Concentrations of Risk (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Risks and Uncertainties [Abstract] | ' | ' |
Revenues from one customer | $7,648,000 | $5,585,000 |
Accounts receivable from one customer | 259,000 | 123,000 |
Accounts payable to one vendor | $32,000 | $15,000 |
Recovered_Sheet1
9. Basic and Diluted Earnings Per Common Share (Details Narrative) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Earnings Per Share [Abstract] | ' | ' |
Antidilutive shares excluded from earnings per share | 9,607,000 | 7,030,000 |
10_Stockholders_Equity_Details
10. Stockholders Equity (Details-Assumptions) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' |
Weighted-average risk-free rate | 0.60% | 0.53% |
Weighted-average volatility | 79.82% | 95.21% |
Dividend yield | 0.00% | 0.00% |
Expected life | '4 years 9 months 18 days | '5 years 8 months 16 days |
10_Stockholders_Equity_Details1
10. Stockholders' Equity (Details-Stock Option Activity) (Stock Options [Member], USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Stock Options [Member] | ' | ' | ' |
Outstanding Options | ' | ' | ' |
Options outstanding, beginning balance | 1,814,000 | 4,314,000 | ' |
Options granted | 1,280,000 | 452,000 | ' |
Options exercised | -30,000 | 0 | ' |
Options cancelled | -245,000 | -1,351,000 | ' |
Options forfeited | -102,000 | -1,596,000 | ' |
Options expired | -53,000 | -5,000 | ' |
Options outstanding, ending balance | 2,664,000 | 1,814,000 | 4,314,000 |
Options vested and exercisable | 1,315,000 | ' | ' |
Weighted average exercise price per share | ' | ' | ' |
Options outstanding, beginning balance | $0.66 | $0.59 | ' |
Options granted | $0.27 | $0.15 | ' |
Options exercised | $0.17 | ' | ' |
Options cancelled | $0.49 | $0.51 | ' |
Options forfeited | $0.19 | $0.45 | ' |
Options expired | $1.09 | $0.98 | ' |
Options outstanding, ending balance | $0.50 | $0.66 | $0.59 |
Options vested and exercisable | $0.76 | ' | ' |
Weighted average remaining contractual life | ' | ' | ' |
Options outstanding, ending balance | '7 years 1 month 20 days | '6 years 4 months 13 days | '7 years 8 months 26 days |
Options vested and exercisable | '5 years 1 month 20 days | ' | ' |
Aggregate Intrinsic Value | ' | ' | ' |
Options outstanding, beginning balance | $25,000 | $2,000 | ' |
Options outstanding, ending balance | 706,000 | 25,000 | 2,000 |
Options vested and exercisable | $201,000 | ' | ' |
10_Stockholders_Equity_Details2
10. Stockholders' Equity (Details-Restricted Stock Units) (Restricted Stock Units (RSUs) [Member], USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Restricted Stock Units (RSUs) [Member] | ' | ' |
Outstanding Restricted Stock Units | ' | ' |
RSUs outstanding, beginning balance | 560,000 | 49,000 |
RSUs granted | 0 | 620,000 |
RSUs released | -373,000 | -44,000 |
RSUs cancelled | 0 | -65,000 |
RSU's outstanding, ending balance | 187,000 | 560,000 |
Balance exercisable | 0 | ' |
Weighted Average Fair Value per Share | ' | ' |
Weighted average fair value per share beginning balance | $0.14 | $0.31 |
Weighted average fair value per share ending balance | $0.14 | $0.14 |
10_Stockholders_Equity_Details3
10. Stockholders' Equity (Details-Warrant Activity) (Warrants [Member], USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Warrants [Member] | ' | ' | ' |
Outstanding warrants | ' | ' | ' |
Warrants outstanding, beginning balance | 4,500,000 | 4,500,000 | ' |
Warrants granted | 3,600,000 | ' | ' |
Warrants exercised | -1,500,000 | ' | ' |
Warrants forfeited | ' | ' | ' |
Warrants outstanding, ending balance | 6,600,000 | 4,500,000 | 4,500,000 |
Weighted Average Exercise Price Per Share | ' | ' | ' |
Warrants outstanding, beginning balance | 0.79 | 0.79 | ' |
Warrants granted | $0.40 | ' | ' |
Warrants exercised | $0.37 | ' | ' |
Warrants forfeited | ' | ' | ' |
Warrants outstanding, ending balance | 0.67 | 0.79 | 0.79 |
Warrants exercisable | $0.40 | ' | ' |
Weighted Average Remaining Contractual Life | ' | ' | ' |
Warrants outstanding, ending balance | '4 years 2 months 5 days | '4 years 4 months 6 days | '5 years 4 months 6 days |
Warrants exercisable | '3 years 4 months 10 days | ' | ' |
10_Stockholders_Equity_Details4
10. Stockholders' Equity (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock-based compensation for employees | $132,000 | $185,000 |
Aggregate intrinsic value of options exercised | 6,000 | ' |
Weighted average grant-date fair value per share price | $0.18 | $0.15 |
Unamortized compensation expense | 150,000 | ' |
Unamortized compensation expense remaining service period | '2 years 3 months 22 days | ' |
Common stock issued upon restricted stock vested | 326,000 | ' |
Common stock issued upon warrants exercised | 798,000 | ' |
Warrants issued in connection with private placement | 3,600,000 | ' |
Fair value of warrants issued | $1,379,000 | ' |
2004 Plan [Member] | ' | ' |
Options outstanding | 773,000 | ' |
2010 Plan [Member] | ' | ' |
Options outstanding | 1,891,000 | ' |
11_Income_Taxes_DetailsTax_Pro
11. Income Taxes (Details-Tax Provision) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Current Tax (Provision) Benefit | ' | ' |
Federal | $0 | $0 |
State | -27,000 | 8,000 |
Foreign | -2,000 | 27,000 |
Current Tax (Provision) Benefit | -29,000 | 35,000 |
Deferred Tax (Provision) Benefit | ' | ' |
Federal | 0 | 0 |
State | -3,000 | 77,000 |
Foreign | -14,000 | -29,000 |
Deferred Tax (Provision) Benefit | -17,000 | 48,000 |
Total Tax (Provison) Benefit | ' | ' |
Federal | 0 | 0 |
State | -30,000 | 85,000 |
Foreign | -16,000 | -2,000 |
Total Tax (Provision) Benefit | ($46,000) | $83,000 |
11_Income_Taxes_DetailsDeferre
11. Income Taxes (Details-Deferred Tax Assets) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current | ' | ' |
Deferred Tax Assets: | ' | ' |
NOL carryforwards | $0 | $0 |
UK NOL carryforwards | 0 | 0 |
Capital loss | 0 | 0 |
Compensation and vacation accrual | 150,000 | 154,000 |
Operating accruals | 37,000 | 60,000 |
Deferred revenue | 224,000 | 0 |
Research and experimentation, AMT and foreign tax credits | 0 | 0 |
State Margin Tax Credit | 0 | 0 |
Fixed assets and intangibles | 0 | 0 |
Foreign | 3,000 | 3,000 |
Other | 130,000 | 162,000 |
Total gross deferred tax assets | 544,000 | 379,000 |
Valuation allowance | -515,000 | -360,000 |
Net deferred tax assets | 29,000 | 19,000 |
Deferred Tax Liabilities: | ' | ' |
Capitalized software | 0 | 0 |
Foreign | 0 | 0 |
Deferred revenue | 0 | 23,000 |
Other | 40,000 | 74,000 |
Total gross deferred liabilities | 40,000 | 97,000 |
Net deferred taxes | -11,000 | -78,000 |
Noncurrent | ' | ' |
Deferred Tax Assets: | ' | ' |
NOL carryforwards | 19,406,000 | 19,743,000 |
UK NOL carryforwards | 772,000 | 756,000 |
Capital loss | 409,000 | 450,000 |
Compensation and vacation accrual | 0 | 0 |
Operating accruals | 302,000 | 380,000 |
Deferred revenue | 0 | 0 |
Research and experimentation, AMT and foreign tax credits | 156,000 | 156,000 |
State Margin Tax Credit | 137,000 | 140,000 |
Fixed assets and intangibles | 630,000 | 844,000 |
Foreign | 0 | 0 |
Other | 157,000 | 138,000 |
Total gross deferred tax assets | 21,969,000 | 22,607,000 |
Valuation allowance | -21,042,000 | -21,715,000 |
Net deferred tax assets | 927,000 | 892,000 |
Deferred Tax Liabilities: | ' | ' |
Capitalized software | 843,000 | 730,000 |
Foreign | 57,000 | 55,000 |
Deferred revenue | 0 | 0 |
Other | 0 | 0 |
Total gross deferred liabilities | 900,000 | 785,000 |
Net deferred taxes | $27,000 | $107,000 |
11_Income_Taxes_DetailsExpecte
11. Income Taxes (Details-Expected Income Taxes) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Tax at federal income tax rate | $342,000 | $367,000 |
State (provision) benefit | -30,000 | 85,000 |
Foreign tax differential | 2,000 | -1,000 |
Change in valuation allowance | -303,000 | -139,000 |
Permanent items | -61,000 | -256,000 |
Other | 4,000 | 27,000 |
Total Tax (Provision) Benefit | ($46,000) | $83,000 |
11_Income_Taxes_Details_Narrat
11. Income Taxes (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Net change in valuation allowance | $303,000 |
NOL carryforwards | 55,581,000 |
NOL carryforward expiration date | 31-Dec-17 |
State NOL carryforward | 21,401,000 |
State tax credit carryforward | $207,000 |
12_Commitments_DetailsOperatin
12. Commitments (Details-Operating Lease) (USD $) | Dec. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $704,000 |
2015 | 716,000 |
2016 | 692,000 |
2017 | 626,000 |
Thereafter | 580,000 |
Total | $3,318,000 |
12_Commitments_DetailsCapital_
12. Commitments (Details-Capital Leased equipment) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Capital leased equipment, gross | $84,000 | $346,000 |
Accumulated depreciation | -21,000 | -217,000 |
Capital leased equipment, net | 63,000 | 129,000 |
Broadcast Equipment [Member] | ' | ' |
Capital leased equipment, gross | 0 | 277,000 |
Other Equipment [Member] | ' | ' |
Capital leased equipment, gross | $84,000 | $69,000 |
12_Commitments_DetailsCapital_1
12. Commitments (Details-Capital lease minimum payments) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
2014 | $32,000 | ' |
2015 | 31,000 | ' |
2016 | 24,000 | ' |
2017 | 7,000 | ' |
Thereafter | 0 | ' |
Total minimum payments | 94,000 | ' |
Less amounts representing interest | -11,000 | ' |
Present value of net minimum payments | 83,000 | ' |
Less current portion | -25,000 | -100,000 |
Long-term capital lease obligations | $58,000 | ' |
12_Commitments_DetailsNotes_Pa
12. Commitments (Details-Notes Payable minimum payments) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
2014 | $713,000 | ' |
2015 | 547,000 | ' |
2016 | 498,000 | ' |
2017 | 13,000 | ' |
Thereafter | 0 | ' |
Total minimum payments | 1,771,000 | ' |
Less amounts representing interest | -178,000 | ' |
Total notes payable | 1,593,000 | ' |
Less current portion | -631,000 | -41,000 |
Long-term portion | $962,000 | $29,000 |
12_Commitments_Details_Narrati
12. Commitments (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Operating lease expense | $581,000 | $579,000 |
Sublease income | 44,000 | ' |
Depreciation expense | 1,567,000 | 1,851,000 |
Interest expense on notes payable | 9,000 | 5,000 |
Assets Held under Capital Leases [Member] | ' | ' |
Depreciation expense | $83,000 | $271,000 |
15_Geographical_Information_De
15. Geographical Information (Details-Revenue) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Geographical information | ' | ' |
Revenue | $23,749,000 | $24,064,000 |
UNITED STATES | ' | ' |
Geographical information | ' | ' |
Revenue | 22,480,000 | 22,551,000 |
CANADA | ' | ' |
Geographical information | ' | ' |
Revenue | $1,269,000 | $1,513,000 |
15_Geographical_Information_De1
15. Geographical Information (Details-Assets) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Long-term tangible assets | $3,237,000 | $3,783,000 |
UNITED STATES | ' | ' |
Long-term tangible assets | 3,220,000 | 3,767,000 |
CANADA | ' | ' |
Long-term tangible assets | $17,000 | $16,000 |