v2.4.0.6
Document And Entity Information
 6 Months Ended
Jun. 30, 2013
Aug. 15, 2013
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q2  
Trading Symbol RACKD  
Entity Common Stock, Shares Outstanding   450,222
Entity Registrant Name Rackwise, Inc.  
Entity Central Index Key 0001476638  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
v2.4.0.6
Condensed Consolidated Balance Sheets (USD $)
Jun. 30, 2013
Dec. 31, 2012
Current Assets:    
Cash and cash equivalents $ 161,858 $ 16,799
Accounts receivable, net of allowance for factoring fees of $7,612 and $165,991, respectively 19,902 381,900
Deferred financing costs, net 363,463 68,344
Prepaid expenses and other current assets 5,716 54,245
Total Current Assets 550,939 521,288
Property and equipment, net 240,909 303,825
Intangible assets, net 88,999 127,063
Deposits and other assets 55,847 55,847
Total Assets 936,694 1,008,023
Current Liabilities:    
Accounts payable 2,361,756 2,211,568
Accounts payable - related parties 110,000 54,497
Due to factor 479,041 891,353
Accrued expenses 2,479,554 2,171,905
Accrued issuable equity 3,600 57,750
Accrued interest 89,357 58,520
Accrued interest - related parties 11,354 22,988
Notes payable 708,945 1,281,973
Notes payable - related parties, net 1,964,914 226,972
Current portion of deferred rent 11,483 99,609
Deferred revenues 699,154 668,086
Total Current Liabilities 8,919,158 7,745,221
Deferred rent, non-current portion 149,219 83,305
Total Liabilities 9,068,377 7,828,526
Commitments and Contingencies      
Stockholders' Deficiency:    
Preferred stock, $0.0001 par value; authorized - 10,000,000 shares; issued and outstanding - none 0 0
Common stock, $0.0001 par value; authorized - 1,000,000 shares; issued and outstanding - 450,222 and 357,780 shares, respectively 45 36
Additional paid-in capital 38,592,389 36,659,566
Accumulated deficit (46,724,117) (43,480,105)
Total Stockholders' Deficiency (8,131,683) (6,820,503)
Total Liabilities and Stockholders' Deficiency $ 936,694 $ 1,008,023
v2.4.0.6
Condensed Consolidated Balance Sheets [Parenthetical] (USD $)
Jun. 30, 2013
Dec. 31, 2012
Accounts receivable, allowance for factoring fees $ 7,612 $ 165,991
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, authorized 10,000,000 10,000,000
Preferred stock, issued 0 0
Preferred stock, outstanding 0 0
Common stock, par value $ 0.0001 $ 0.0001
Common stock, authorized 1,000,000 1,000,000
Common stock, issued 450,222 357,780
Common stock, outstanding 450,222 357,780
v2.4.0.6
Condensed Consolidated Statements of Operations (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenues $ 420,925 $ 1,192,489 $ 964,372 $ 1,876,638
Direct cost of revenues 133,193 56,332 280,060 118,297
Gross Profit 287,732 1,136,157 684,312 1,758,341
Operating Expenses        
Sales and marketing 265,819 1,502,993 876,258 2,412,066
Research and development 422,430 558,432 871,254 1,199,544
General and administrative 827,563 1,300,092 1,556,510 2,609,596
Total Operating Expenses 1,515,812 3,361,517 3,304,022 6,221,206
Loss From Operations (1,228,080) (2,225,360) (2,619,710) (4,462,865)
Other (Expense) Income        
Interest (30,927) (7,056) (55,225) (7,729)
Amortization of debt discount (7,915) (433,333) (7,915) (433,333)
Amortization of deferred financing costs (18,284) 0 (29,726) 0
Loss on extinguishment 0 0 (531,436) 0
Other (expense) income 0 (5,695) 0 3,368
Total Other Expense (57,126) (446,084) (624,302) (437,694)
Net Loss $ (1,285,206) $ (2,671,444) $ (3,244,012) $ (4,900,559)
Net Loss Per Common Share - Basic and Diluted $ (3.32) $ (8.33) $ (8.50) $ (15.31)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted 386,619 320,791 381,532 320,062
v2.4.0.6
Condensed Consolidated Statement of Changes in Stockholders' Deficiency Equity (USD $)
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Beginning Balance at Dec. 31, 2012 $ (6,820,503) $ 36 $ 36,659,566 $ (43,480,105)
Beginning Balance (in shares) at Dec. 31, 2012   357,780    
Issuance of common stock and warrants - private placement, net 129,999 0 129,999 0
Issuance of common stock and warrants - private placement, net (in shares)   3,334    
Issuance of accrued equity 10,583 0 10,583 0
Issuance of accrued equity (in shares) 1,417 1,417    
Stock-based compensation 161,117 0 161,117 0
Stock-based compensation (in shares)   0    
Conversion of notes and accrued interest into common stock and warrants 1,311,172 3 1,311,169 0
Conversion of notes and accrued interest into common stock and warrants (in shares)   29,913    
Issuance of common stock in satisfaction of accounts payable 130,000 6 129,994 0
Issuance of common stock in satisfaction of accounts payable (in shares)   57,778    
Beneficial conversion feature related to convertible notes payable 189,961 0 189,961 0
Beneficial conversion feature related to convertible notes payable (in shares)   0    
Net Loss (3,244,012) 0 0 (3,244,012)
Ending balance at Jun. 30, 2013 $ (8,131,683) $ 45 $ 38,592,389 $ (46,724,117)
Ending Balance (in shares) at Jun. 30, 2013   450,222    
v2.4.0.6
Condensed Consolidated Statements of Cash Flows (USD $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash Flows From Operating Activities    
Net loss $ (3,244,012) $ (4,900,559)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 109,726 109,432
Loss on sale of fixed assets 0 5,837
Stock-based compensation 117,550 [1] 996,395 [1]
Cancellation of shares pursuant to settlement agreement 0 (57,000)
Loss on extinguishment 531,436 0
Amortization of debt discount 7,915 433,333
Amortization of deferred financing costs 29,726 0
Deferred rent (22,212) 158,842
Changes in operating assets and liabilities:    
Accounts receivable, net 361,998 (573,910)
Prepaid expenses and other current assets 48,529 29,895
Deposits and other assets 0 (33,715)
Accounts payable 280,188 503,014
Accounts payable - related parties 55,503 16,910
Accrued expenses 307,649 75,692
Accrued interest 64,118 0
Accrued interest - related parties (11,634) 625
Deferred revenues 31,068 (47,335)
Total Adjustments 1,911,560 1,618,015
Net Cash Used in Operating Activities (1,332,452) (3,282,544)
Cash Flows From Investing Activities    
Acquisition of property and equipment (2,370) (216,813)
Acquisition of intangible assets (6,376) (61,217)
Net Cash Used in Investing Activities (8,746) (278,030)
Cash Flows From Financing Activities    
Proceeds from issuance of common stock and warrants, net 129,999 [2] 1,466,977 [2]
Proceeds from convertible notes payable - related parties 1,462,960 0
Proceeds from convertible notes payable 0 580,000
Proceeds from Bridge Units 0 500,000
Deferred financing costs (378,390) (61,843)
Due to factor, net 271,688 733,187
Payment of capital lease obligations 0 (3,237)
Net Cash Provided by Financing Activities 1,486,257 3,215,084
Net Increase (Decrease) In Cash 145,059 (345,490)
Cash - Beginning 16,799 613,443
Cash - Ending 161,858 267,953
Non-cash operating and financing activities:    
Issuance of accrued equity 10,583 1,560,030
Equity issuable (3,600) 0
Cancellation of shares 0 (57,000)
Conversion of notes payable and accrued interest into equity 779,736 0
Warrants issued in connection with issuance of notes payable 189,961 0
Shares issued in satisfaction of accounts payable 130,000 0
Convertible notes and warrants issued in satisfaction of amounts due to factor $ 684,000 $ 0
[1] Includes accrued issuable equity of $(54,150) and $68,750 for the six months ended June 30, 2013 and 2012, respectively.
[2] Gross proceeds of $150,000 and $1,653,611, less issuance costs of $20,001 and $186,634 for the six months ended June 30, 2013 and 2012, respectively.
v2.4.0.6
Condensed Consolidated Statements of Cash Flows [Parenthetical] (USD $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Gross proceeds from issuance of common stock and warrants $ 150,000 $ 1,653,611
Gross proceeds, issuance costs 20,001 186,634
Accrued issuable equity $ (54,150) $ 68,750
v2.4.0.6
Organization and Operations
 6 Months Ended
Jun. 30, 2013
Organization, Operations, and Basis Of Presentation [Abstract]  
Organization and Operations
Note 1 - Organization and Operations
 
Organization and Operations
 
Rackwise, Inc. and Subsidiary (collectively “Rackwise” or the “Company”) is headquartered in Folsom, California, with a software development and data center in Research Triangle, North Carolina. The Company creates Microsoft applications for network infrastructure administrators that provide for the modeling, planning, and documentation of data centers. The Company sells its applications in four primary products: Rackwise Standard Edition, Rackwise Enterprise Edition, Rackwise Datacenter Manager and Rackwise Web Edition.
 
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2013. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the operating results for the full year. It is recommended that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and related disclosures for the year ended December 31, 2012 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 16, 2013.
 
Effective August 2, 2013, pursuant to authority granted by the Board of Directors of the Company, the Company implemented a 1-for-300 reverse split of the Company’s issued and outstanding common stock (the “Reverse Split”) and a reduction in the number of shares of common stock authorized to be issued by the Company from 300,000,000 to 1,000,000. All share and per share information in this Form 10-Q has been retroactively adjusted to reflect the Reverse Split.
v2.4.0.6
Liquidity, Going Concern and Management's Plans
 6 Months Ended
Jun. 30, 2013
Going Concern Disclosure [Abstract]  
Liquidity, Going Concern and Management's Plans
Note 2 – Liquidity, Going Concern and Management’s Plans
 
The Company has incurred substantial recurring losses since its inception. The Company’s current strategy is to raise capital and invest that capital in such a way that the Company rapidly grows its market share and revenues, eventually resulting in profits and cash from operations. However, this strategy has required a rapid build-up of infrastructure that initially exacerbated the Company’s operating deficit and use of cash in operations, because the expected revenue expansion will lag the investment in infrastructure. The capital that the Company has raised, and likely will continue to raise, will be used to invest in infrastructure, to fund development of the software product, to fund incremental legal and accounting costs associated with being a public company and to fund the Company’s operating deficit and general working capital requirements.
 
During the six months ended June 30, 2013 and the twelve months ended December 31, 2012, the Company generated approximately $1,486,000 and $4,561,000 in cash from financing activities, respectively, from factoring its receivables and from private offerings of common stock, warrants and debt funding. This capital has permitted the Company to continue its investment in product development and has provided working capital for the Company to win a modest amount of new business throughout the first six months of 2013. However, the amount of new business generated did not support the Company’s increased infrastructure and due to cash constraints the Company was forced to reduce costs until such time that either the anticipated level of revenue materializes or the Company raises sufficient additional capital.
 
During the six months ended June 30, 2013 and 2012, the Company recorded net losses of approximately $3,244,000 and $4,901,000, respectively. Through cost reduction measures, the Company decreased its net loss during the six months ended June 30, 2013 despite revenues decreasing to approximately $964,000 from approximately $1,877,000 in the prior period. During the six months ended June 30, 2013 and 2012, the Company used cash in operating activities of approximately $1,332,000 and $3,283,000, respectively. As of June 30, 2013, the Company had limited cash of approximately $162,000, a working capital deficiency of approximately $8,368,000, an accumulated deficit of approximately $46,724,000 and owes approximately $1,377,000 for payroll tax liabilities, penalties and interest which has yet to be remitted to the taxing authorities. The IRS has placed federal tax liens that aggregate to approximately $771,000 against the Company in connection with the unpaid payroll taxes through the third quarter of 2012.
  
Subsequent to June 30, 2013, the Company completed one closing of a private placement offering in which the Company sold $190,925 of units at a price of $10,000 per unit. Each unit consists of (i) $10,000 principal amount of one year, 12% secured convertible promissory notes and (ii) a five-year warrant to purchase 267 shares of common stock at a price of $3.00 per share at any time after the maturity date of the notes. On August 14, 2013, the Company borrowed $250,000 via a short-term interest free loan from an affiliate. The loan is intended to convert into the Units Offering. The capital raised in the private placement offering will be utilized to fund existing operating deficits while the Company continues to develop product line(s) and enhance marketing efforts to increase revenues and eventually generate operating surpluses. The Company believes it will be successful in these efforts; however, there can be no assurance the Company will meet its revenues forecasts or, if necessary, be successful in raising additional debt or equity financing to fund its operations on terms agreeable to the Company. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company were unable to continue as a going concern. The Company expects that the cash it has available will fund its operations only until September 2013. If the Company is unable to obtain additional financing on a timely basis and, notwithstanding any request the Company may make, the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, the Company may have to delay note and vendor payments and/or initiate cost reductions, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations, liquidate, and/or seek reorganization under the U.S. bankruptcy code.
v2.4.0.6
Significant Accounting Policies
 6 Months Ended
Jun. 30, 2013
Significant Accounting Policies [Abstract]  
Significant Accounting Policies
Note 3 – Significant Accounting Policies
 
Accounts Receivable and Allowance for Doubtful Accounts
 
The Company recognizes an allowance for doubtful accounts to ensure that accounts receivable are not overstated due to uncollectibility. At the time accounts receivable are originated, the Company considers a reserve for doubtful accounts based on the creditworthiness of customers. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on historical performance that is tracked by the Company on an ongoing basis. During the three and six months ended June 30, 2013 and 2012, the Company’s losses from bad debts were not material. The losses ultimately incurred could differ materially in the near term from the amounts estimated in determining the allowance.
 
In addition, the Company factors its receivables with full recourse and, as a result, accounts for the factoring akin to a secured borrowing, maintaining the gross receivable asset and due to factor liability on its books and records. In connection with the factoring of its receivables, the Company estimates an allowance for factoring fees associated with the collections. These fees range from 2% to 80% depending on the actual timing of the collection. The actual recognition of such fees may differ from the estimates depending upon the timing of collections. Due to the current tax liens, the Company is currently in default of this factoring arrangement. As such, the factor could demand full repayment of the outstanding balance.
 
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. The significant estimates and assumptions of the Company are stock-based compensation, the useful lives of fixed assets and intangibles, depreciation and amortization, the allowances for factoring fees and income taxes, and the fair value of convertible financial instruments.
 
Concentration of Credit Risk and Customers
 
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company's cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount. The Company generally does not require collateral from its customers and generally requires payment in 30 days. The Company evaluates the collectability of its accounts receivable and provides an allowance for potential credit losses as necessary. Historically, such losses have been within management’s expectations.
 
One customer provided 50% and 39% of revenues during the three and six months ended June 30, 2012, respectively. There were no revenue concentrations during the three and six months ended June 30, 2013. All of the Company’s long-lived assets are located in the United States of America.
 
As of June 30, 2013, receivables from four customers comprised 43%, 27%, 14% and 10% of total receivables, respectively. As of December 31, 2012, receivables from four customers comprised 19%, 17%, 14% and 14% of total receivables, respectively.
 
Intangible Assets
 
All of the Company’s intangible assets consist of shapes acquired from a graphics designer for the Company’s database library that are schematics of specific computer equipment. These shapes, having a finite life are valued at cost and are utilized in the Company’s software with multiple customers in order to enable them to visualize and differentiate the specific computer equipment in their overall network. For example, the Company’s software’s graphical user interface displays a unique shape for each make and model of computer server. Intangible assets are recorded at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 2.5 years.
 
Revenue Recognition
 
In accordance with ASC topic 985-605, “Software Revenue Recognition,” perpetual license revenue is recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. Delivery is considered to have occurred when title and risk of loss have been transferred to the customer, which generally occurs after a license key has been delivered electronically to the customer. The Company’s perpetual license agreements do not (a) provide for a right of return, (b) contain acceptance clauses, (c) contain refund provisions, or (d) contain cancellation provisions.
 
In the case of the Company’s (a) subscription-based licenses, and (b) maintenance arrangements, when sold separately, revenues are recognized ratably over the service period. The Company defers revenue for software license and maintenance agreements when cash has been received from the customer and the agreement does not qualify for recognition under ASC Topic 985-605. Such amounts are reflected as deferred revenues in the accompanying financial statements. The Company’s subscription license agreements do not (a) provide for a right of return, (b) contain acceptance clauses, (c) contain refund provisions, or (d) contain cancellation provisions.
 
The Company provides professional services to its customers. Such services, which include training, installation, and implementation, are recognized when the services are performed. The Company also provides volume discounts to various customers. In accordance with ASC Topic 985-605, the discount is allocated proportionally to the delivered elements of the multiple-element arrangement and recognized accordingly.
 
For software arrangements with multiple elements, which in its case are comprised of (1) licensing fees, (2) professional services, and (3) maintenance/support, revenue is recognized dependent upon whether vendor specific objective evidence (“VSOE”) of fair value exists for separating each of the elements. Licensing rights are generally delivered at time of invoice, professional services are delivered within one to six months and maintenance is for a twelve month contract. Accordingly, licensing revenues are recognized upon invoice, professional services are recognized when all services have been delivered and maintenance revenue is amortized over a twelve month period. The Company determined that VSOE exists for both the delivered and undelivered elements of its multiple-element arrangements. The Company limits its assessment of fair value to either (a) the price charged when the same element is sold separately or (b) the price established by management having the relevant authority. There may be cases, however, in which there is objective and reliable evidence of fair value of the undelivered item(s) but no such evidence for the delivered item(s). In those cases, the selling price method is used to allocate the arrangement consideration, if all other revenue recognition criteria are met. Under the selling price method, the amount of consideration allocated to the delivered item(s) is calculated based on estimated selling prices.
  
Fair Value of Financial Instruments
 
The carrying amounts of financial instruments, including cash, accounts receivables, accounts payable, accrued expenses and deferred revenue, approximated fair value as of the balance sheet date presented, because of the relatively short maturity dates on these instruments. The carrying amounts of the financing arrangements issued approximate fair value as of the balance sheet date presented, because interest rates on these instruments approximate market interest rates after consideration of stated interest rates, anti-dilution protection and associated warrants.
 
Stock-Based Compensation
 
The Company has an equity plan which allows for the granting of stock options to its employees, directors and consultants for a fixed number of shares with an exercise price equal to the fair value of the shares at date of grant. The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on interim financial reporting dates and vesting dates until the service period is complete. The fair value amount is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period. Since the shares underlying the Company’s equity are not currently registered, the fair value of the Company’s restricted equity instruments are estimated based on historical observations of cash prices paid for the Company's restricted common stock, when such sales are evident.
 
Stock-based compensation for directors is reflected in general and administrative expenses in the condensed consolidated statements of operations. Stock-based compensation for employees and consultants could be reflected in (a) sales and marketing expenses; (b) research and development expenses; or (c) general and administrative expenses in the condensed consolidated statements of operations.
 
Net Loss Per Common Share
 
Basic net loss per share is computed by dividing the net loss applicable to common shares by the weighted average number of common shares outstanding during the period. Weighted average shares outstanding for three and six months ended June 30, 2013 (1) includes the weighted average impact of 1,000 shares of common stock issuable as of June 30, 2013 and (2) excludes the weighted average impact of the 10,000 shares of common stock being held in escrow (the “Escrowed Shares”). Weighted average shares outstanding for the three and six months ended June 30, 2012 excludes the weighted average impact of the Escrowed Shares. In accordance with the accounting literature, (1) the Company has given effect to the issuance of the issuable stock in computing basic net loss per share because the underlying shares are issuable for little or no cash consideration; and (2) the Company has excluded the impact of the Escrowed Shares because they are contingently returnable.
 
Diluted net loss per common share adjusts basic net loss per common share for the effects of potentially dilutive financial instruments, only in the periods in which such effects exist and are dilutive. At June 30, 2013, outstanding stock options and warrants to purchase 69,480 and 292,384 shares of common stock, respectively, were excluded from the calculation of diluted net loss per common share because their impact would have been anti-dilutive. At June 30, 2012, outstanding stock options and warrants to purchase 74,028 and 169,173 shares of common stock were excluded from the calculation of diluted net loss per common share because their impact would have been anti-dilutive.
 
Recent Accounting Pronouncements
 
In April 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-07, “Presentation of Financial Statements (Topic 205) - Liquidation Basis of Accounting." This ASU addresses the requirements and methods of applying the liquidation basis of accounting and the disclosure requirements within Accounting Standards Codification ("ASC") Topic 205 for the purpose of providing consistency between the financial reporting of U.S. GAAP liquidating entities. Generally, this ASU provides guidance for the preparation of financial statements and disclosures when liquidation is imminent. This ASU is effective for periods beginning after December 15, 2013 and is only expected to have an impact on the Company’s condensed consolidated financial statements or disclosures if liquidation of the Company became imminent.
v2.4.0.6
Accrued Expenses
 6 Months Ended
Jun. 30, 2013
Payables and Accruals [Abstract]  
Accrued Expenses
Note 4 – Accrued Expenses
 
Accrued expenses consist of the following:
 
 
 
June 30,
 
December 31,
 
 
 
2013
 
2012
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Accrued commissions
 
$
546,754
 
$
508,654
 
Accrued payroll
 
 
297,263
 
 
270,551
 
Accrued payroll taxes(1)
 
 
1,377,207
 
 
1,099,887
 
Accrued vacation
 
 
211,760
 
 
219,206
 
Accrued professional fees
 
 
46,570
 
 
73,607
 
 
 
 
 
 
 
 
 
Total accrued expenses
 
$
2,479,554
 
$
2,171,905
 
 
(1) Includes accrual for interest and penalties.
 
Accrued expenses include liabilities for unpaid payroll taxes along with an estimate of related interest and penalties. Through June 30, 2013, the Internal Revenue Service (“IRS”) has placed Federal tax liens aggregating approximately $771,000 against the Company in connection with these unpaid payroll taxes. 
v2.4.0.6
Notes Payable
 6 Months Ended
Jun. 30, 2013
Notes Payable [Abstract]  
Notes Payable
Note 5 – Notes Payable
 
5% Note
 
In December 2008, the Company issued a $50,000 5% note payable (the “5% Note”). The 5% Note was due in June 2009 and was in default at June 30, 2013 and December 31, 2012. Accrued interest related to the 5% Note was $11,390 (included in Accrued Interest) and $10,151 (included in Accrued Interest – Related Parties) at June 30, 2013 and December 31, 2012, respectively. The holder was no longer a greater than 10% beneficial owner at June 30, 2013.
 
12% Notes – Amended Terms
 
As of June 30, 2013 and December 31, 2012, $508,945 face value of 12% convertible promissory notes (the “Amended 12% Notes”) remained outstanding and were in default. Pursuant to the terms of the Amended 12% Notes, noteholders are entitled to all legal remedies in order to pursue collection and the Company is obligated to bear all reasonable costs of collection. To date, no Amended 12% Note holders have pursued collection.
 
Accrued interest was $67,811 and $24,688 related to the Amended 12% Notes outstanding at June 30, 2013 and December 31, 2012, respectively. Accrued interest – related parties was $12,837  related to the $176,972 of Amended 12% Notes held by a related party (a director) outstanding at December 31, 2012. The director resigned during the second quarter of 2013. 
 
8% Notes
 
On January 21, 2013, note holders elected to convert $800,000 of 8% convertible notes (the “8% Notes) plus $33,281 of accrued and unpaid interest into 28,489 shares of common stock and a five-year warrant to purchase 28,489 shares of common stock at an exercise price of $90.00 per share (the “Conversion Securities”), pursuant to an offer from the Company. The 8% Notes converted into the Conversion Securities at a price equal to $29.25 (65% of $45.00) per unit, wherein each unit consisted of one share of common stock and a warrant to purchase one share of common stock. As a result of the note conversion, Bridge Warrants to purchase 2,667 shares of common stock had their exercise price adjusted to $67.50 and their term was extended to January 21, 2016. The $1,311,172 aggregate value of the securities issued ($1,281,927 related to the Conversion Securities and $29,200 related to the incremental value of the Bridge Warrants) was credited to equity at conversion. The Company recorded $531,436 of extinguishment loss which represents the incremental value of the securities issued pursuant to the offer as compared to the carrying value of the 8% Notes, accrued interest, plus $53,545 of unamortized debt offering costs.
 
There were $150,000 and $950,000 of outstanding 8% Notes, plus $10,156 and $33,832 of accrued interest, at June 30, 2013 and December 31, 2012, respectively. See Note 9 – Subsequent Events regarding the conversion of $100,000 of the 8% Notes. The remaining $50,000 of 8% Notes is past due as of the filing date and is ranked senior to the Offering Notes. During the three and six months ended June 30, 2013, the Company recorded amortization of deferred financing costs of $2,518 and $13,960, respectively.
  
Short-Term Loans
 
On April 12, May 15, and May 30, 2013, the Company borrowed $112,500, $200,035 and $150,035, respectively, via short-term interest free loans from a principal shareholder  (the “Short-Term Loans”). On June 11, 2013, the Short-Term Loans were converted into the Units Offering. See below for details.
 
Units Offering
 
During the six months ended June 30, 2013, the Company had two closings of a private offering that commenced on June 11, 2013, pursuant to which the Company sold an aggregate of $2,146,960 in units at a price of $10,000 per unit to Navesink RACK, LLC and Black Diamond Financial Group LLC and their affiliates (collectively, the “Purchasers” and the Company’s principal shareholders) (the “Units Offering”). The Company is offering up to $5,000,000 in units. Each unit (an “Offering Unit”) consists of (i) $10,000 principal amount of 12% secured convertible promissory notes (the “Offering Notes”) and (ii) a five-year warrant to purchase 267 shares of common stock at a price of $3.00 per share at any time after the maturity date of the Offering Notes (the “Offering Warrants”), such that the Purchasers were issued Offering Warrants to purchase an aggregate of 57,253 shares of common stock. There was $2,146,960 of Offering Notes, plus $11,354 of accrued interest, outstanding at June 30, 2013.
 
The closings of the Units Offering resulted in aggregate net proceeds of $622,000 ($2,146,960 of gross proceeds less $1,146,570 of debt conversions less $378,390 of financing costs). Issuance costs of $378,390 were capitalized as deferred financing costs and are being amortized over the term of the Offering Notes. During the three and six months ended June 30, 2013, the Company recorded amortization of deferred financing costs of $15,766. The closings included the conversion of $1,146,570 of Company debt ($462,570 of Short-Term Loans and $684,000 previously owed to the Company’s factor which was assumed by an affiliate) incurred by the Company or assumed by the Purchasers during the second quarter of 2013. See Note 9 – Subsequent Events for details of closings subsequent to June 30, 2013.
 
The Offering Notes mature one year from the date of issuance. Pursuant to an amended agreement, the Purchasers may, individually, on a one-time basis, as the result of making a collective investment in excess of $1,500,000 in the aggregate, at any time during the term of the Offering Notes, convert the Offering Notes, including all accrued interest due thereon, into 1,275,629 shares (collectively  2,551,258 shares) of the Company’s common stock (the “Conversion Shares”) which represents 42.5% each (collectively 85%) of the Company’s issued and outstanding common shares as of August 2, 2013, the date of the Reverse Split. The Company is in the process of increasing the Company’s authorized common stock from 1,000,000 shares to 300,000,000 shares, which has already been approved by the Company’s Board of Directors and a majority of the Company’s common stockholders. By agreement, the Purchasers will each receive 50% of the Conversion Shares without regard to their respective subscription amounts. The Purchasers may determine to convert the Offering Notes prior to the completion of the offering. In such event, subscriptions for additional Offering Units otherwise issuable to the Purchasers in connection with subsequent subscriptions will be treated as contributions to capital. In conjunction with such a conversion and the issuance of the Conversion Shares, the Offering Warrants shall be cancelled.
 
Pursuant to the terms of the Unit Offering, each Purchaser will either (a) utilize the conversion option (to obtain 1,275,629  shares of the Company’s common stock) or (b) will retain the Offering Warrants; but each Purchaser cannot avail itself of both.  The Company determined that the embedded conversion options were equity instruments and should not be bifurcated and accounted for as a derivative. Accordingly, a debt discount of $189,961 was established (with a credit to additional paid-in capital), which represents the greater of the relative fair value of the Offering Warrants or the beneficial conversion feature attributable to the conversion option. The debt discount is being amortized over the term of the Offering Notes. During the three and six months ended June 30, 2013, the Company recorded amortization of debt discount of $7,915.
 
As collateral security for the Company’s obligations under the Offering Notes and related documents executed in connection with the offering, the Company and Visual Network Design, Inc., a Delaware corporation and the Company’s wholly-owned subsidiary (“VNDI”), granted the Purchasers a security interest in all of the Company’s and VNDI’s assets pursuant to the terms of a security agreement, dated as of June 11, 2013 (the “Security Agreement”). To further secure the Company’s obligations, VNDI executed a guaranty, dated as of June 11, 2013 (the “Guaranty”), pursuant to which VNDI agreed to guaranty the Company’s obligations owed to the Purchasers. The Offering Notes are junior in priority to the Company’s indebtedness to its factor, trade debt and a $50,000 8% Note.
v2.4.0.6
Equity
 6 Months Ended
Jun. 30, 2013
Equity [Abstract]  
Equity
Note 6 – Equity
 
Consulting Agreement
 
On January 7, 2013, the Company entered into a twelve-month agreement for investor relations services. In consideration of the services to be rendered, the Company agreed to provide $75,000 of common stock upon completion of the initial 45-day test campaign. Pursuant to the agreement, upon receipt of the results of the test campaign, future services and payment terms are to be agreed upon by both parties. As of June 30, 2013, the services anticipated under the agreement have yet to have been performed and no shares have been issued.
 
Private Offerings
 
Third Private Offering
 
During the six months ended June 30, 2013, the Company had two additional closings in connection with a prior private offering that commenced on September 1, 2012 (the “Third Private Offering”), pursuant to which an aggregate of 3,334 investor units (“Third Units”) were sold at a price of $45.00 per Third Unit, resulting in $129,999 of aggregate net proceeds ($150,000 of gross proceeds less $20,001 of issuance costs). Each Third Unit consists of one share of common stock and a redeemable warrant to purchase one share of common stock. In addition, the placement agent was paid cash commissions of $15,000 (a component of issuance costs) and was issued five-year Third Broker Warrants to purchase 334 shares of the Company’s common stock at an exercise price of $45.00 per share. The closings resulted in warrants, which are classified within equity, to purchase 671 shares of common stock having their exercise price reduced to $90.00 per share, including warrants to purchase 338 and 333 shares whose original exercise price was $187.50 per share and $300.00 per share, respectively.
 
The Third Investor Warrants are exercisable for a period of five years at an exercise price of $90.00 per share of common stock, are subject to weighted average anti-dilution protection and possess piggy-back registration rights. The Third Investor Warrants are redeemable at a price of $0.003 per share upon the provision of adequate notice, if and only if (a) the common stock’s average closing bid price exceeds $300.00 for five of any ten consecutive trading days; and (b) the twenty-day average daily volume exceeds 67 shares and there is no more than one single day of no volume. The Third Broker Warrants are identical to the Third Investor Warrants in all material respects except that (i) the resale of the common stock underlying them is not covered by a registration statement; and (ii) they have an exercise price of $45.00 per share of common stock. The Company determined that all warrants issued in conjunction with the Third Private Offering were equity instruments.
 
Unissued Common Stock
 
On May 13, 2013, the Company issued 1,417 shares of common stock to a service provider and the fair value on the date of issuance of $10,583 was credited to equity. Previously, the value of the shares was included in accrued issuable equity in the condensed consolidated balance sheets.
 
As of June 30, 2013, the Company had not issued instructions to its transfer agent to issue 1,000 shares of common stock due to a service provider, therefore the value of the shares was included in accrued issuable equity in the condensed consolidated balance sheets.
 
Stock Warrants
 
A summary of the stock warrant activity during the six months ended June 30, 2013 is presented below:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
 
 
 
 
 
Number of
 
Exercise
 
Life
 
Intrinsic
 
 
 
Warrants
 
Price
 
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2012
 
 
201,908
 
$
169.80
 
 
 
 
 
 
 
Issued
 
 
90,476
 
 
34.52
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Cancelled
 
 
-
 
 
-
 
 
 
 
 
 
 
Balance, June 30, 2013
 
 
292,384
 
$
126.57
[1]
 
3.99
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, June 30, 2013
 
 
292,384
 
$
126.57
[1]
 
3.99
 
$
-
 
 
[1] - Investor warrants to purchase 501 shares of common stock had a variable exercise price as of June 30, 2013. These warrants are excluded from the weighted average exercise price.
 
The following table presents information related to stock warrants at June 30, 2013:
 
Warrants Outstanding
 
Warrants Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Warrants
 
In Years
 
Warrants
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3.00
 
 
57,253
 
 
4.96
 
 
57,253
 
 
45.00
 
 
2,651
 
 
4.35
 
 
2,651
 
 
67.50
 
 
4,066
 
 
2.55
 
 
4,066
 
 
75.00
 
 
3,376
 
 
3.29
 
 
3,376
 
 
90.00
 
 
68,489
 
 
4.31
 
 
68,489
 
 
112.50
 
 
1,935
 
 
3.50
 
 
1,935
 
 
187.50
 
 
128,457
 
 
3.24
 
 
128,457
 
 
198.00
 
 
20,001
 
 
5.40
 
 
20,001
 
 
300.00
 
 
5,655
 
 
4.18
 
 
5,655
 
 
Variable
 
 
501
 
 
2.15
 
 
501
 
 
 
 
 
292,384
 
 
3.99
 
 
292,384
 
 
The warrants outstanding in the tables above do not include (1) warrants issuable to investors upon future conversion of their convertible notes; and (2) warrants issuable to the 8% bridge unit placement agent upon the investors’ future conversion of their convertible notes. See Note 5 – Notes Payable for additional details.
 
As of June 30, 2013, the warrants to purchase an aggregate of 501 shares of common stock with a variable exercise price (equal to 65% of the conversion date twenty-day volume weighted average price of the common stock) were exercisable at approximately $2.90 per share.
 
In addition, all of the warrants are subject to weighted average anti-dilution protection upon the issuance of common stock, or securities convertible into common stock, at prices below specified trigger prices. The Third Private Offering and the Units Offering appear to result in dilutive issuances pursuant to the original terms of the warrants. While the Units Offering is not yet complete, the Company has performed a preliminary analysis of the impact of the weighted average anti-dilution adjustment provisions as of June 30, 2013 and estimates that the weighted average exercise prices may have declined by approximately 75%, whereas the quantity of shares attributable to each warrant may have increased by a multiple of approximately 3.85 on a weighted average basis.
 
Stock Options
 
In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:
 
 
 
For The Three Months Ended
 
For The Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
Risk free interest rate
 
 
n/a
 
 
n/a
 
 
n/a
 
 
0.96 - 1.11
%
Expected term (years)
 
 
n/a
 
 
n/a
 
 
n/a
 
 
5.40 - 6.00
 
Expected volatility
 
 
n/a
 
 
n/a
 
 
n/a
 
 
75
%
Expected dividends
 
 
n/a
 
 
n/a
 
 
n/a
 
 
0
%
 
The risk-free interest rate was based on rates of treasury securities with the same expected term as the options. Since the Company’s stock has not been publicly traded for a long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The expected dividend yield was based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the future.
 
There were no stock options granted during the three and six months ended June 30, 2013 or during the three months ended June 30, 2012. The weighted average estimated fair value of the stock options granted during the six months ended June 30, 2012 was $66.00 per share. The Company used forfeiture assumptions of 10% to 20% per annum.
 
During the three months ended June 30, 2013 and 2012, the overall stock-based compensation (credit) expense recorded by the Company associated with options was $(819)  (which included a credit of $(97,862) related to the forfeiture of stock options) and $462,183, respectively. During the six months ended June 30, 2013 and 2012, the overall stock-based compensation expense recorded by the Company associated with options was $161,117 and $893,145, respectively. These amounts have been included in operating expenses in the accompanying condensed consolidated statements of operations. As of June 30, 2013, there was approximately $454,014 of unrecognized stock-based compensation expense that will be amortized over a weighted average period of 1.4 years.
 
A summary of the option activity during the six months ended June 30, 2013 is presented below:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
 
 
 
 
 
Number of
 
Exercise
 
Life
 
Intrinsic
 
 
 
Options
 
Price
 
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2012
 
 
82,272
 
$
103.34
 
 
 
 
 
 
 
Granted
 
 
-
 
 
-
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Forfeited
 
 
(12,792)
 
 
103.61
 
 
 
 
 
 
 
Outstanding, June 30, 2013
 
 
69,480
 
$
103.29
 
 
8.1
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, June 30, 2013
 
 
48,015
 
$
103.62
 
 
8.4
 
$
-
 
  
The following table presents information related to stock options at June 30, 2013:
 
Options Outstanding
 
Options Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Options
 
In Years
 
Options
 
 
 
 
 
 
 
 
 
 
 
 
 
$
54.00
 
 
167
 
 
-
 
 
-
 
 
60.00
 
 
167
 
 
-
 
 
-
 
 
66.00
 
 
250
 
 
-
 
 
-
 
 
103.50
 
 
57,513
 
 
8.5
 
 
41,785
 
 
104.40
 
 
11,383
 
 
7.4
 
 
6,230
 
 
 
 
 
69,480
 
 
8.4
 
 
48,015
 
v2.4.0.6
Related Party Transations
 6 Months Ended
Jun. 30, 2013
Related Party Transactions [Abstract]  
Related Party Transactions
Note 7 – Related Party Transactions
 
Effective January 1, 2013, the Company’s agreement with a stockholder to provide financial advisory services to the Company automatically renewed for an additional twelve month term, which provides that the Company pay fees of $10,000 per month for twelve months. The agreement shall be extended for successive one-year periods unless either party provides written notice 30 days prior to the end of the term of its election to terminate the agreement. During the three and six months ended June 30, 2013, the Company recorded expense of $30,000 and $60,000 related to the agreement. During the three and six months ended June 30, 2012, the Company recorded expense of $30,000 and $100,000 (which included a one-time fee of $40,000), respectively, related to the agreement.
v2.4.0.6
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2013
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
Note 8 - Commitments and Contingencies
 
Litigation
 
On October 26, 2012, the Company was named as defendant in a complaint filed in the County of Westchester, Supreme Court of the State of New York by Porter, Levay & Rose, Inc., index number 68540/2012. The complaint alleges the Plaintiff rendered work, labor and services to the Company on, about, or between October 18, 2012, and is seeking $103,198, together with interest running from October 18, 2012. On April 30, 2013, Porter, Levay & Rose, Inc. was awarded a summary judgment. On May 6, 2013, a judgment was entered in favor of Porter, Levay & Rose, Inc. in the Supreme Court of the State of New York, County of Westchester for an amount which was accrued for at June 30, 2013.
 
On January 22, 2013, the Company was named as defendant in a complaint filed in the Superior Court of California, County of Sacramento, case number 34-2013-00138819 by Babich & Associates, Inc., a Texas Corporation. The complaint alleges that the Company was invoiced for services relating to professional staffing services for 2 potential employees that the Company subsequently hired, and is seeking $48,000 plus earned interest at the rate of 10% per annum from May 3, 2012. On April 25, 2013, the parties signed a settlement for an amount which was accrued for at June 30, 2013. Payment is pending.
 
On January 25, 2013, the Company and its CEO were named defendants in a complaint filed in the Superior Court of California, County of Sacramento, case number 34-2013-00138978 by Daniel Lucas, a former employee. The complaint alleges that the Company entered into an employment agreement with Mr. Lucas for the purposes of providing services as the Company’s Regional Sales Manager, that the Company and its CEO breached the agreement by refusing to compensate Mr. Lucas for his services, and as a result, Mr. Lucas is seeking lost compensation and benefits in the amount of $77,429, compensatory damages, attorneys’ fees, interest, and any other relief as the court deems just and proper. The Company disputes these claims and has hired counsel to represent it in the matter.
 
On January 25, 2013, the Company and its CEO were named defendants in a complaint filed in the Superior Court of California, County of Sacramento case number 34-2013-00138979 by Timothy Barone, a former employee who was terminated for cause. The complaint alleges that the Company entered into an employment agreement with the Plaintiff for the purposes of providing services as the Company’s Senior Vice President, Global Accounts and Partners, that the Company and its CEO breached the agreement by refusing to compensate Mr. Barone for his services, and as a result, Mr. Barone is seeking lost compensation and benefits in the amount of $194,596, additional tax liability of $150,000, compensatory damages, exemplary and/or punitive damages in an amount to be determined, attorneys’ fees, interest, and any other relief as the court deems just and proper. The Company disputes these claims and has hired counsel to represent it in the matter.
 
On February 20, 2013, the Company was named as a defendant in a complaint filed in the Superior Court, Wake County, State of North Carolina, case number I3CV002442 by Accentuate Staffing Inc. (“Accentuate”). The complaint alleges that the Company was invoiced for services relating to professional staffing services as defined in a certain contract executed on December 20, 2011, and is seeking $59,824 plus interest and costs as allowed by law. On April 3, 2013, Accentuate obtained Entry of Default and Default Judgment and on April 25, 2013, a Writ of Execution was issued. On July 3, 2013, this case was settled in full for an amount which was accrued for at June 30, 2013.
 
On February 25, 2013, the Company, its CEO and its CFO were named defendants in a complaint filed in the Superior Court, Commonwealth of Massachusetts, civil case number 13-0641 by David E. Fahey, a former employee of the company. The complaint alleges that Mr. Fahey was not paid commissions that were due and owing and the Company failed to reimburse the Plaintiff for his business expenses, resulting in a breach of contract, and is seeking $33,695 in commissions, $4,300 in out of pocket expenses, and treble damages, attorney’s fees, costs, and interest. The Company disputes these claims and has hired counsel to represent it in the matter.
 
On March 7, 2013, the Company was named as a defendant in a complaint yet to be filed in District Court, First Judicial District, Carver County, State of Minnesota. The complaint alleges that the Company has not paid commissions totaling $11,900 to Dan Skrove, a former employee who resigned in 2012. In April 2013, the complaint was settled. In May 2013, the Company paid in full.
 
On March 11, 2013, the Company was named as a defendant in a complaint filed in the Superior Court, Wake County, State of North Carolina, case number 13CV003506 by TSG and Associates, LLC d/b/a The Select Group Raleigh, LLC. The complaint alleges that the Company was invoiced for services relating to professional staffing services as described by a Direct Hire Agreement dated June 13, 2011, and is seeking $41,000, plus attorney’s fees of $6,150. The Company is currently working toward a settlement agreement and has recorded an accrual at June 30, 2013.
 
On June 19, 2013, the Company and its CEO were named defendants in a complaint filed in the Superior Court of California, County of Sacramento case number 34-2013-00146750 by David Wagner, a former employee of the Company who resigned from the Company. The complaint alleges that the Company entered into an employment agreement with the Plaintiff for the purposes of providing services as the Company’s Executive Vice President, Sales, that the Company and its CEO breached the agreement by refusing to compensate Mr. Wagner for his services, and as a result, Mr. Wagner is seeking lost compensation and benefits in the amount of $137,965.72, severance pay in the amount of $45,000, attorneys’ fees, interest, and any other relief as the court deems just and proper. The Company disputes these claims and has hired counsel to represent it in the matter.
 
The Company records legal costs associated with loss contingencies as incurred.
v2.4.0.6
Subsequent Events
 6 Months Ended
Jun. 30, 2013
Subsequent Events [Abstract]  
Subsequent Events
Note 9 - Subsequent Events
 
The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required further adjustment or disclosure in the condensed consolidated financial statements.
 
8% Note Conversion
 
On July 1, 2013, in connection with the Units Offering, a noteholder converted an 8% Note in the amount of $106,533 (including outstanding principal and interest) into the Units Offering.
 
Units Offering
 
On July 11, 2013, the Company had a closing of the Units Offering, pursuant to which the Company sold an aggregate of $190,925 in Offering Units, such that the Purchasers were issued Offering Warrants to purchase an aggregate of 5,092 shares of common stock with a relative fair value of $1,291. The fair value of the Offering Warrants was recorded as debt discount and will be amortized over the term of the Offering Notes.
 
Short-Term Loans
 
On August 14, 2013, the Company borrowed $250,000 via a short-term interest free loan from an affiliate. The loan is intended to convert into the Units Offering.
v2.4.0.6
Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2013
Significant Accounting Policies [Abstract]  
Accounts Receivable and Allowance for Doubtful Accounts
Accounts Receivable and Allowance for Doubtful Accounts
 
The Company recognizes an allowance for doubtful accounts to ensure that accounts receivable are not overstated due to uncollectibility. At the time accounts receivable are originated, the Company considers a reserve for doubtful accounts based on the creditworthiness of customers. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on historical performance that is tracked by the Company on an ongoing basis. During the three and six months ended June 30, 2013 and 2012, the Company’s losses from bad debts were not material. The losses ultimately incurred could differ materially in the near term from the amounts estimated in determining the allowance.
 
In addition, the Company factors its receivables with full recourse and, as a result, accounts for the factoring akin to a secured borrowing, maintaining the gross receivable asset and due to factor liability on its books and records. In connection with the factoring of its receivables, the Company estimates an allowance for factoring fees associated with the collections. These fees range from 2% to 80% depending on the actual timing of the collection. The actual recognition of such fees may differ from the estimates depending upon the timing of collections. Due to the current tax liens, the Company is currently in default of this factoring arrangement. As such, the factor could demand full repayment of the outstanding balance.
Use of Estimates
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. The significant estimates and assumptions of the Company are stock-based compensation, the useful lives of fixed assets and intangibles, depreciation and amortization, the allowances for factoring fees and income taxes, and the fair value of convertible financial instruments.
Concentration of Credit Risk and Customers
Concentration of Credit Risk and Customers
 
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company's cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount. The Company generally does not require collateral from its customers and generally requires payment in 30 days. The Company evaluates the collectability of its accounts receivable and provides an allowance for potential credit losses as necessary. Historically, such losses have been within management’s expectations.
 
One customer provided 50% and 39% of revenues during the three and six months ended June 30, 2012, respectively. There were no revenue concentrations during the three and six months ended June 30, 2013. All of the Company’s long-lived assets are located in the United States of America.
 
As of June 30, 2013, receivables from four customers comprised 43%, 27%, 14% and 10% of total receivables, respectively. As of December 31, 2012, receivables from four customers comprised 19%, 17%, 14% and 14% of total receivables, respectively.
Intangible Assets
Intangible Assets
 
All of the Company’s intangible assets consist of shapes acquired from a graphics designer for the Company’s database library that are schematics of specific computer equipment. These shapes, having a finite life are valued at cost and are utilized in the Company’s software with multiple customers in order to enable them to visualize and differentiate the specific computer equipment in their overall network. For example, the Company’s software’s graphical user interface displays a unique shape for each make and model of computer server. Intangible assets are recorded at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 2.5 years.
Revenue Recognition
Revenue Recognition
 
In accordance with ASC topic 985-605, “Software Revenue Recognition,” perpetual license revenue is recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. Delivery is considered to have occurred when title and risk of loss have been transferred to the customer, which generally occurs after a license key has been delivered electronically to the customer. The Company’s perpetual license agreements do not (a) provide for a right of return, (b) contain acceptance clauses, (c) contain refund provisions, or (d) contain cancellation provisions.
 
In the case of the Company’s (a) subscription-based licenses, and (b) maintenance arrangements, when sold separately, revenues are recognized ratably over the service period. The Company defers revenue for software license and maintenance agreements when cash has been received from the customer and the agreement does not qualify for recognition under ASC Topic 985-605. Such amounts are reflected as deferred revenues in the accompanying financial statements. The Company’s subscription license agreements do not (a) provide for a right of return, (b) contain acceptance clauses, (c) contain refund provisions, or (d) contain cancellation provisions.
 
The Company provides professional services to its customers. Such services, which include training, installation, and implementation, are recognized when the services are performed. The Company also provides volume discounts to various customers. In accordance with ASC Topic 985-605, the discount is allocated proportionally to the delivered elements of the multiple-element arrangement and recognized accordingly.
 
For software arrangements with multiple elements, which in its case are comprised of (1) licensing fees, (2) professional services, and (3) maintenance/support, revenue is recognized dependent upon whether vendor specific objective evidence (“VSOE”) of fair value exists for separating each of the elements. Licensing rights are generally delivered at time of invoice, professional services are delivered within one to six months and maintenance is for a twelve month contract. Accordingly, licensing revenues are recognized upon invoice, professional services are recognized when all services have been delivered and maintenance revenue is amortized over a twelve month period. The Company determined that VSOE exists for both the delivered and undelivered elements of its multiple-element arrangements. The Company limits its assessment of fair value to either (a) the price charged when the same element is sold separately or (b) the price established by management having the relevant authority. There may be cases, however, in which there is objective and reliable evidence of fair value of the undelivered item(s) but no such evidence for the delivered item(s). In those cases, the selling price method is used to allocate the arrangement consideration, if all other revenue recognition criteria are met. Under the selling price method, the amount of consideration allocated to the delivered item(s) is calculated based on estimated selling prices.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
 
The carrying amounts of financial instruments, including cash, accounts receivables, accounts payable, accrued expenses and deferred revenue, approximated fair value as of the balance sheet date presented, because of the relatively short maturity dates on these instruments. The carrying amounts of the financing arrangements issued approximate fair value as of the balance sheet date presented, because interest rates on these instruments approximate market interest rates after consideration of stated interest rates, anti-dilution protection and associated warrants.
Stock-Based Compensation
Stock-Based Compensation
 
The Company has an equity plan which allows for the granting of stock options to its employees, directors and consultants for a fixed number of shares with an exercise price equal to the fair value of the shares at date of grant. The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on interim financial reporting dates and vesting dates until the service period is complete. The fair value amount is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period. Since the shares underlying the Company’s equity are not currently registered, the fair value of the Company’s restricted equity instruments are estimated based on historical observations of cash prices paid for the Company's restricted common stock, when such sales are evident.
 
Stock-based compensation for directors is reflected in general and administrative expenses in the condensed consolidated statements of operations. Stock-based compensation for employees and consultants could be reflected in (a) sales and marketing expenses; (b) research and development expenses; or (c) general and administrative expenses in the condensed consolidated statements of operations.
Net Loss Per Common Share
Net Loss Per Common Share
 
Basic net loss per share is computed by dividing the net loss applicable to common shares by the weighted average number of common shares outstanding during the period. Weighted average shares outstanding for three and six months ended June 30, 2013 (1) includes the weighted average impact of 1,000 shares of common stock issuable as of June 30, 2013 and (2) excludes the weighted average impact of the 10,000 shares of common stock being held in escrow (the “Escrowed Shares”). Weighted average shares outstanding for the three and six months ended June 30, 2012 excludes the weighted average impact of the Escrowed Shares. In accordance with the accounting literature, (1) the Company has given effect to the issuance of the issuable stock in computing basic net loss per share because the underlying shares are issuable for little or no cash consideration; and (2) the Company has excluded the impact of the Escrowed Shares because they are contingently returnable.
 
Diluted net loss per common share adjusts basic net loss per common share for the effects of potentially dilutive financial instruments, only in the periods in which such effects exist and are dilutive. At June 30, 2013, outstanding stock options and warrants to purchase 69,480 and 292,384 shares of common stock, respectively, were excluded from the calculation of diluted net loss per common share because their impact would have been anti-dilutive. At June 30, 2012, outstanding stock options and warrants to purchase 74,028 and 169,173 shares of common stock were excluded from the calculation of diluted net loss per common share because their impact would have been anti-dilutive.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
 
In April 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-07, “Presentation of Financial Statements (Topic 205) - Liquidation Basis of Accounting." This ASU addresses the requirements and methods of applying the liquidation basis of accounting and the disclosure requirements within Accounting Standards Codification ("ASC") Topic 205 for the purpose of providing consistency between the financial reporting of U.S. GAAP liquidating entities. Generally, this ASU provides guidance for the preparation of financial statements and disclosures when liquidation is imminent. This ASU is effective for periods beginning after December 15, 2013 and is only expected to have an impact on the Company’s condensed consolidated financial statements or disclosures if liquidation of the Company became imminent.
v2.4.0.6
Accrued Expenses (Tables)
 6 Months Ended
Jun. 30, 2013
Payables and Accruals [Abstract]  
Accrued expenses
Accrued expenses consist of the following:
 
 
 
June 30,
 
December 31,
 
 
 
2013
 
2012
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Accrued commissions
 
$
546,754
 
$
508,654
 
Accrued payroll
 
 
297,263
 
 
270,551
 
Accrued payroll taxes(1)
 
 
1,377,207
 
 
1,099,887
 
Accrued vacation
 
 
211,760
 
 
219,206
 
Accrued professional fees
 
 
46,570
 
 
73,607
 
 
 
 
 
 
 
 
 
Total accrued expenses
 
$
2,479,554
 
$
2,171,905
 
 
(1) Includes accrual for interest and penalties.
v2.4.0.6
Equity (Tables)
 6 Months Ended
Jun. 30, 2013
Equity [Abstract]  
Schedule of Warrant Activity
A summary of the stock warrant activity during the six months ended June 30, 2013 is presented below:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
 
 
 
 
 
Number of
 
Exercise
 
Life
 
Intrinsic
 
 
 
Warrants
 
Price
 
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2012
 
 
201,908
 
$
169.80
 
 
 
 
 
 
 
Issued
 
 
90,476
 
 
34.52
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Cancelled
 
 
-
 
 
-
 
 
 
 
 
 
 
Balance, June 30, 2013
 
 
292,384
 
$
126.57
[1]
 
3.99
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, June 30, 2013
 
 
292,384
 
$
126.57
[1]
 
3.99
 
$
-
 
 
[1] - Investor warrants to purchase 501 shares of common stock had a variable exercise price as of June 30, 2013. These warrants are excluded from the weighted average exercise price.
Schedule of Warrant
The following table presents information related to stock warrants at June 30, 2013:
 
Warrants Outstanding
 
Warrants Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Warrants
 
In Years
 
Warrants
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3.00
 
 
57,253
 
 
4.96
 
 
57,253
 
 
45.00
 
 
2,651
 
 
4.35
 
 
2,651
 
 
67.50
 
 
4,066
 
 
2.55
 
 
4,066
 
 
75.00
 
 
3,376
 
 
3.29
 
 
3,376
 
 
90.00
 
 
68,489
 
 
4.31
 
 
68,489
 
 
112.50
 
 
1,935
 
 
3.50
 
 
1,935
 
 
187.50
 
 
128,457
 
 
3.24
 
 
128,457
 
 
198.00
 
 
20,001
 
 
5.40
 
 
20,001
 
 
300.00
 
 
5,655
 
 
4.18
 
 
5,655
 
 
Variable
 
 
501
 
 
2.15
 
 
501
 
 
 
 
 
292,384
 
 
3.99
 
 
292,384
 
Schedule of Black-Scholes Option Pricing Model To Options Granted
In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:
 
 
 
For The Three Months Ended
 
For The Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
Risk free interest rate
 
 
n/a
 
 
n/a
 
 
n/a
 
 
0.96 - 1.11
%
Expected term (years)
 
 
n/a
 
 
n/a
 
 
n/a
 
 
5.40 - 6.00
 
Expected volatility
 
 
n/a
 
 
n/a
 
 
n/a
 
 
75
%
Expected dividends
 
 
n/a
 
 
n/a
 
 
n/a
 
 
0
%
Schedule of Share-based Compensation, Stock Options, Activity
A summary of the option activity during the six months ended June 30, 2013 is presented below:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
 
 
 
 
 
Number of
 
Exercise
 
Life
 
Intrinsic
 
 
 
Options
 
Price
 
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, December 31, 2012
 
 
82,272
 
$
103.34
 
 
 
 
 
 
 
Granted
 
 
-
 
 
-
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Forfeited
 
 
(12,792)
 
 
103.61
 
 
 
 
 
 
 
Outstanding, June 30, 2013
 
 
69,480
 
$
103.29
 
 
8.1
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, June 30, 2013
 
 
48,015
 
$
103.62
 
 
8.4
 
$
-
 
Schedule of Stock Option Outstanding
The following table presents information related to stock options at June 30, 2013:
 
Options Outstanding
 
Options Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Options
 
In Years
 
Options
 
 
 
 
 
 
 
 
 
 
 
 
 
$
54.00
 
 
167
 
 
-
 
 
-
 
 
60.00
 
 
167
 
 
-
 
 
-
 
 
66.00
 
 
250
 
 
-
 
 
-
 
 
103.50
 
 
57,513
 
 
8.5
 
 
41,785
 
 
104.40
 
 
11,383
 
 
7.4
 
 
6,230
 
 
 
 
 
69,480
 
 
8.4
 
 
48,015
 
v2.4.0.6
Organization and Operations-Additional information (Detail)
 6 Months Ended
Jun. 30, 2013
Number
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]  
Number Of Products 4
Subsequent Event [Member]
  
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]  
Stockholders Equity Note Stock Split Conversion Description 1-for-300
Subsequent Event [Member] | Minimum [Member]
  
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]  
Stock Issued During Period, Shares, Reverse Stock Splits 1,000,000
Subsequent Event [Member] | Maximum [Member]
  
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]  
Stock Issued During Period, Shares, Reverse Stock Splits 300,000,000
v2.4.0.6
Liquidity, Going Concern and Management's Plans - Additional Information (Details) (USD $)
 3 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2013
Subsequent Event [Member]
Aug. 14, 2013
Subsequent Event [Member]
Short-term Debt [Member]
Jun. 30, 2013
Subsequent Event [Member]
Unit Offering [Member]
Jun. 30, 2013
Subsequent Event [Member]
Unit Offering [Member]
Convertible Promissory Notes [Member]
Jun. 30, 2013
Private Placement [Member]
Jun. 30, 2012
Private Placement [Member]
Dec. 31, 2012
Private Placement [Member]
Going Concern [Line Items]                          
Net Cash Provided by Financing Activities     $ 1,486,257 $ 3,215,084             $ 1,486,000   $ 4,561,000
Net Loss (1,285,206) (2,671,444) (3,244,012) (4,900,559)             3,244,000 4,901,000  
Short-term Debt, Total               250,000          
Revenues 420,925 1,192,489 964,372 1,876,638                  
Net Cash Used in Operating Activities     (1,332,452) (3,282,544)             1,332,000 3,283,000  
Cash 162,000   162,000                    
Working Capital Deficiency 8,368,000   8,368,000                    
Accumulated deficit (46,724,117)   (46,724,117)   (43,480,105)                
Income Tax Examination, Penalties Accrued 1,377,000   1,377,000                    
Unpaid payroll taxes 771,000   771,000     771,000              
Units Sold In Private Placement Value             190,925            
Unit Price             10,000            
Long-term Debt, Gross                   $ 10,000      
Debt Instrument, Interest Rate, Stated Percentage 12.00%   12.00%             12.00%      
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right                 267        
Share Price Per Common Stock                 3.00        
v2.4.0.6
Significant Accounting Policies - Additional Information (Details)
 3 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Equity Option [Member]
Jun. 30, 2012
Equity Option [Member]
Jun. 30, 2013
Warrant [Member]
Jun. 30, 2012
Warrant [Member]
Jun. 30, 2013
Customer One [Member]
Dec. 31, 2012
Customer One [Member]
Jun. 30, 2013
Customer Two [Member]
Dec. 31, 2012
Customer Two [Member]
Jun. 30, 2013
Customer Three [Member]
Dec. 31, 2012
Customer Three [Member]
Jun. 30, 2013
Customer Four [Member]
Dec. 31, 2012
Customer Four [Member]
Jun. 30, 2013
Minimum [Member]
Jun. 30, 2013
Maximum [Member]
Significant Accounting Policies [Line Items]                                  
Business Acquisition Purchase Price Indemnification Shares In Escrow   10,000                              
Weighted average underlying shares exercisable with respect to issuance of warrants   1,000                              
Receivable factoring, allowance for factoring fees                               2.00% 80.00%
Finite-Lived Intangible Asset, Useful Life   2 years 6 months                              
Concentration Risk, Percentage 50.00%   39.00%                            
Concentration Of Risk Accounts Receivable Percentage               43.00% 19.00% 27.00% 17.00% 14.00% 14.00% 10.00% 14.00%    
Antidilutive securities       69,480 74,028 292,384 169,173                    
v2.4.0.6
Accrued Expenses (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Accrued Expenses [Line Items]    
Accrued commissions $ 546,754 $ 508,654
Accrued payroll 297,263 270,551
Accrued payroll taxes 1,377,207 [1] 1,099,887 [1]
Accrued vacation 211,760 219,206
Accrued professional fees 46,570 73,607
Total accrued expenses $ 2,479,554 $ 2,171,905
[1] Includes accrual for interest and penalties.
v2.4.0.6
Accrued Expenses - Additional Information (Details) (USD $)
Jun. 30, 2013
Sep. 30, 2012
Accrued Expenses [Line Items]    
Unpaid payroll taxes $ 771,000 $ 771,000
v2.4.0.6
Notes Payable - Additional Information (Details) (USD $)
 3 Months Ended 6 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Jun. 30, 2013
Subsequent Event [Member]
May 30, 2013
Short Term Loan [Member]
May 15, 2013
Short Term Loan [Member]
Apr. 12, 2013
Short Term Loan [Member]
Jun. 30, 2013
Maximum [Member]
Jun. 30, 2013
Minimum [Member]
Jan. 21, 2013
Convertible Debt Securities [Member]
Jun. 30, 2013
Units Offering [Member]
Jun. 30, 2013
Units Offering [Member]
Jun. 30, 2013
Units Offering [Member]
Short Term Loan [Member]
Jun. 30, 2013
Units Offering [Member]
Company Factor [Member]
Jun. 30, 2013
Units Offering [Member]
Collective [Member]
Jun. 30, 2013
Units Offering [Member]
Minimum [Member]
Dec. 31, 2008
5 % Notes Payable [Member]
Jun. 30, 2013
5 % Notes Payable [Member]
Dec. 31, 2012
5 % Notes Payable [Member]
Dec. 31, 2012
12 % Notes Payable Original Issuance [Member]
Dec. 31, 2012
12 % Notes Payable Original Issuance [Member]
Director [Member]
Jun. 30, 2013
12 % Notes Payable Amended Terms [Member]
Dec. 31, 2012
12 % Notes Payable Amended Terms [Member]
Dec. 31, 2012
12 % Notes Payable Amended Terms [Member]
Director [Member]
Jan. 21, 2013
8 % Notes Payable Terms [Member]
Jun. 30, 2013
8 % Notes Payable Terms [Member]
Jun. 30, 2013
8 % Notes Payable Terms [Member]
Dec. 31, 2012
8 % Notes Payable Terms [Member]
Jun. 30, 2013
8 % Notes Payable Terms [Member]
Senior Offering Notes [Member]
Jan. 21, 2013
Bridge Warrant [Member]
Jun. 30, 2013
12% Secured Convertible Promissory Notes [Member]
Units Offering [Member]
Jun. 30, 2013
Offering Warrants [Member]
Units Offering [Member]
Jun. 30, 2013
Offering Notes [Member]
Units Offering [Member]
Notes Payable [Line Items]                                                                      
Convertible Notes Payable                                                     $ 800,000                
Debt Instrument, Increase, Accrued Interest                                                     33,281                
Warrant, exercise price 126.57 [1]   126.57 [1]   169.80                                           90.00         67.50      
Purchase Of Shares Warrants Issued                                                     28,489         2,667      
Notes Payable                                     50,000             176,972                  
Debt instrument, interest rate 12.00%   12.00%                               5.00%         12.00% 12.00%     8.00% 8.00% 8.00%     12.00%    
Debt Instrument, Face Amount                         5,000,000 5,000,000                           150,000 150,000 950,000     10,000   50,000
Accrued interest                                       11,390 10,151   12,837 67,811 24,688     10,156 10,156 33,832          
Un Issued Shares Of Common Stock 1,000   1,000                                               28,489                
Debt Instrument, Debt Default, Amount                                           508,945   508,945                      
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage                                     10.00%                                
Notes issued, conversion price per unit                                                     $ 29.25                
Debt Instrument Convertible Conversion Price Description                                                     65% of $45.00                
Loss on extinguishment 0 0 (531,436) 0                                             531,436                
Unamortized Debt Issuance Expense                                                     53,545                
Equity Issued During Period, Shares, Conversion of Convertible Securities                       1,311,172                                              
Equity Issued During Period, Value, Conversion of Convertible Securities                       1,281,927                                       29,200      
Debt conversion, converted instrument, amount                                                         100,000   50,000        
Short-term Debt, Total             150,035 200,035 112,500                                                    
Units Sold In Private Placement Value           190,925               2,146,960                                          
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right                                                                   267  
Sale Of Stock Price Per Share                                                                   $ 3.00  
Class of Warrant or Right, Number of Securities Called by Warrants or Rights                                                                   57,253  
Long-term Debt, Gross                                                                     2,146,960
Debt Instrument Accrued Interest                                                                     11,354
Proceeds from Debt, Net of Issuance Costs                           622,000                                          
Proceeds from Issuance of Debt                           2,146,960                                          
Price of units issued                         10,000 10,000                                          
Debt Issuance Cost                           1,146,570                                          
Deferred Finance Costs, Net                         378,390 378,390                                          
Amortization Of Deferred Finance Costs                         15,766 15,766                           2,518 13,960            
Debt Conversion, Original Debt, Amount                           1,146,570 462,570 684,000                                      
Shares Issuable Upon Conversion                         1,275,629 1,275,629     2,551,258                                    
Debt Instrument Discount                           189,961                                          
Amortization of Debt Discount (Premium) 7,915 433,333 7,915 433,333                   7,915                                          
Notes issued                                   1,500,000                                  
Debt Conversion Accrued Interest Into Shares                           1,275,629                                          
Conversion Of Shares Percentage                         42.50% 42.50%     85.00%                                    
Conversion Of Shares Receivable Percentage                         50.00% 50.00%                                          
Payments of Financing Costs, Total     $ 378,390 $ 61,843                   $ 378,390                                          
Common Stock, Shares Authorized 1,000,000   1,000,000   1,000,000         300,000,000 1,000,000                                                
[1] Investor warrants to purchase 501 shares of common stock had a variable exercise price as of June 30, 2013. These warrants are excluded from the weighted average exercise price.
v2.4.0.6
Summary Of Warrant Activity (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Schedule Of Warrant Activity [Line Items]  
Number of Warrants, Opening Balance 201,908
Number of Warrants, Warrants Issued 90,476
Number of Warrants, Warrants Exercised 0
Number of Warrants, Warrants Cancelled 0
Number of Warrants, Closing Balance 292,384
Number of Warrants, Exercisable 292,384
Weighted Average Exercise Price Of Warrants, Opening Balance 169.80
Warrants Issued Weighted Average Exercise Price 34.52
Warrants Exercised Weighted Average Exercise Price 0
Warrants Cancelled Weighted Average Exercise Price 0
Weighted Average Exercise Price Of Warrants, Closing Balance 126.57 [1]
Warrants Exercisable Weighted Average Exercise Price 126.57 [1]
Weighted Average Remaining Life 3 years 11 months 26 days
Warrants Exercisable Weighted Average Remaining Life 3 years 11 months 26 days
Warrants Outstanding Intrinsic Value $ 0
Warrants Exercisable Intrinsic Value $ 0
[1] Investor warrants to purchase 501 shares of common stock had a variable exercise price as of June 30, 2013. These warrants are excluded from the weighted average exercise price.
v2.4.0.6
Schedule Of Stock Warrants (Details)
 6 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 292,384 201,908
Warrant exercise price 126.57 [1] 169.80
Weighted Average Remaining Life 3 years 11 months 26 days  
Number of Warrants, Exercisable 292,384  
Warrants Exercise Price 3.00 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 57,253  
Warrant exercise price 3.00  
Weighted Average Remaining Life 4 years 11 months 16 days  
Number of Warrants, Exercisable 57,253  
Warrants Exercise Price 45.00 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 2,651  
Warrant exercise price 45.00  
Weighted Average Remaining Life 4 years 4 months 6 days  
Number of Warrants, Exercisable 2,651  
Warrants Exercise Price 67.50 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 4,066  
Warrant exercise price 67.50  
Weighted Average Remaining Life 2 years 6 months 18 days  
Number of Warrants, Exercisable 4,066  
Warrants Exercise Price 75.00 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 3,376  
Warrant exercise price 75.00  
Weighted Average Remaining Life 3 years 3 months 14 days  
Number of Warrants, Exercisable 3,376  
Warrants Exercise Prices 90.00 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 68,489  
Warrant exercise price 90.00  
Weighted Average Remaining Life 4 years 3 months 22 days  
Number of Warrants, Exercisable 68,489  
Warrants Exercise Price 112.50 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 1,935  
Warrant exercise price 112.50  
Weighted Average Remaining Life 3 years 6 months  
Number of Warrants, Exercisable 1,935  
Warrants Exercise Price 187.50 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 128,457  
Warrant exercise price 187.50  
Weighted Average Remaining Life 3 years 2 months 26 days  
Number of Warrants, Exercisable 128,457  
Warrants Exercise Price 198.00 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 20,001  
Warrant exercise price 198.00  
Weighted Average Remaining Life 5 years 4 months 24 days  
Number of Warrants, Exercisable 20,001  
Warrants Exercise Price 300.00 [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 5,655  
Warrant exercise price 300.00  
Weighted Average Remaining Life 4 years 2 months 5 days  
Number of Warrants, Exercisable 5,655  
Variable [Member]
    
Schedule Of Warrant Activity [Line Items]    
Number of Warrant, Outstanding 501  
Weighted Average Remaining Life 2 years 1 month 24 days  
Number of Warrants, Exercisable 501  
[1] Investor warrants to purchase 501 shares of common stock had a variable exercise price as of June 30, 2013. These warrants are excluded from the weighted average exercise price.
v2.4.0.6
Options Granted Weighted Average Assumptions (Details)
 6 Months Ended
Jun. 30, 2012
Options Granted Weighted Average Assumptions [Line Items]  
Expected volatility 75.00%
Expected dividends 0.00%
Maximum [Member]
  
Options Granted Weighted Average Assumptions [Line Items]  
Risk free interest rate 1.11%
Expected term (years) 6 years
Minimum [Member]
  
Options Granted Weighted Average Assumptions [Line Items]  
Risk free interest rate 0.96%
Expected term (years) 5 years 4 months 24 days
v2.4.0.6
Summary Of The Option Activity (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Options Balance 82,272
Options Granted 0
Options Exercised 0
Options Forfeited (12,792)
Options Balance 69,480
Options Exercisable 48,015
Options Balance Weighted Average Exercise Price $ 103.34
Options Granted Weighted Average Exercise Price $ 0
Options Exercised Weighted Average Exercise Price $ 0
Options Forfeited Weighted Average Exercise Price $ 103.61
Options Balance Weighted Average Exercise Price $ 103.29
Options Exercisable Weighted Average Exercise Price $ 103.62
Options Balance Contractual Term 8 years 1 month 6 days
Options Exercisable Contractual Term 8 years 4 months 24 days
Options Balance Intrinsic Value $ 0
Options Exercisable Intrinsic Value $ 0
v2.4.0.6
Stock Options (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Option, outstanding number 69,480 82,272
Option exercisable, contractual term 8 years 4 months 24 days  
Option, exercisable number 48,015  
Options Exercise Price 54.00 [Member]
    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Options, exercise price $ 54.00  
Option, outstanding number 167  
Option exercisable, contractual term 0 years  
Option, exercisable number 0  
Options Exercise Price 60.00 [Member]
    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Options, exercise price $ 60.00  
Option, outstanding number 167  
Option exercisable, contractual term 0 years  
Option, exercisable number 0  
Options Exercise Price 66.00 [Member]
    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Options, exercise price $ 66.00  
Option, outstanding number 250  
Option exercisable, contractual term 0 years  
Option, exercisable number 0  
Options Exercise Price 103.50 [Member]
    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Options, exercise price $ 103.50  
Option, outstanding number 57,513  
Option exercisable, contractual term 8 years 6 months  
Option, exercisable number 41,785  
Options Exercise Price 104.40 [Member]
    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Options, exercise price $ 104.40  
Option, outstanding number 11,383  
Option exercisable, contractual term 7 years 4 months 24 days  
Option, exercisable number 6,230  
v2.4.0.6
Equity - Additional Information (Details) (USD $)
 6 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Jun. 30, 2013
Third Broker Warrants [Member]
Jun. 30, 2013
Warrant [Member]
Jun. 30, 2012
Minimum [Member]
Jun. 30, 2012
Maximum [Member]
Jun. 30, 2013
Third Investor Warrants [Member]
Jun. 30, 2013
Options [Member]
Jun. 30, 2012
Options [Member]
Jun. 30, 2013
Options [Member]
Jun. 30, 2012
Options [Member]
Jun. 30, 2013
Third Private Offering [Member]
Jun. 30, 2013
Third Private Offering [Member]
Issuance One [Member]
Jun. 30, 2013
Third Private Offering [Member]
Issuance Two [Member]
Jan. 07, 2013
Monthly Payment [Member]
Public relations and financial communications services [Member]
Equity Note [Line Items]                                
Cash value of common stock issued in consideration of services received                               $ 75,000
Sale of investor units, price per unit                         $ 45.00      
Gross Proceeds From Issuance Of Private Placement                         150,000      
Payments for Commissions       15,000                        
Minimum average daily common stock trading volume               67                
Warrants Issued To Purchase Of Common Shares 501     334 501               671 338 333  
Warrant, original exercise price               90.00         90.00 187.50 300.00  
Warrants Redeemable Price               $ 0.003                
Un Issued Shares Of Common Stock 1,000                              
Warrant, exercise price 126.57 [1]   169.80 45.00 2.90     45.00                
Average closing bid price of common stock               $ 300.00                
Weighted Average Estimated Fair Value, Stock Options   $ 66.00                            
Forfeiture Assumption Percentage           10.00% 20.00%                  
Unrecognized stock-based compensation expense 454,014                              
Amortized Weighted Average Period 1 year 4 months 24 days                              
Stock-based compensation 161,117               (819) 462,183 161,117 893,145        
Aggregate Net Proceed                         129,999      
Private offerings of common stock and warrants, issuance costs 20,001 186,634                     20,001      
Stock Issued During Period Shares Issuance Of Accrued Equity 1,417                              
Stock Issued During Period Value Issuance Of Accrued Equity 10,583 1,560,030                            
Class Of Weighted Average Exercise Price 3.85                              
Warrant Conversion Exercise Price Details equal to 65% of the conversion date twenty-day volume weighted average price of the common stock                              
Reduction Of Weighted Average exercise Price Percentage 75.00%                              
Stock Option Forfeited During Period $ (97,862)                              
[1] Investor warrants to purchase 501 shares of common stock had a variable exercise price as of June 30, 2013. These warrants are excluded from the weighted average exercise price.
v2.4.0.6
Related Party Transations - Additional Information (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Financial Advisory Service Fees Per Month     $ 10,000  
Financial Advisory Service Fees 30,000 30,000 60,000 100,000
Financial Advisory Service One Time Fee       $ 40,000
v2.4.0.6
Commitments and Contingencies - Additional Information (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Commitments and Contingencies [Line Items]  
Loss Contingency Damages Severance Pay Value $ 45,000
Levy Rose Inc [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date October 26, 2012
Loss Contingency Damages Additional Sought Value 103,198
Babich Associates, Inc [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date January 22, 2013
Loss Contingency, Damages Sought, Value 48,000
Loss Contingency Damages Sought Percentage 10.00%
Daniel Lucas [Member] | Former Employer [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date January 25, 2013
Loss Contingency, Damages Sought, Value 77,429
Timothy Barone [Member] | Former Employer [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Damages Sought, Value 194,596
Loss Contingency Damages Additional Sought Value 150,000
Accentuate Staffing Inc [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date February 20, 2013
Loss Contingency, Damages Sought, Value 59,824
Loss Contingency, Damages Sought Seeking $59,824 plus interest and costs as allowed by law
David E.Father [Member] | Former Employer [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date February 25, 2013
Loss Contingency, Damages Sought, Value 33,695
Loss Contingency Damages Sought Value Expenses 4,300
Dan Skrove [Member] | Former Employer [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date March 7, 2013
Loss Contingency, Damages Sought, Value 11,900
Tsg and Associates [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date March 11, 2013
Loss Contingency, Damages Sought, Value 41,000
Loss Contingency and Damages Sought Value Attotneys Fee 6,150
Mr. Wagner [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Lawsuit Filing Date June 19, 2013
Loss Contingency and Damages Sought Value Attotneys Fee 45,000
Mr. Wagner [Member] | Former Employer [Member] | Subsequent Event [Member]
  
Commitments and Contingencies [Line Items]  
Loss Contingency, Damages Sought, Value $ 137,965.72
v2.4.0.6
Subsequent Events - Additional Information (Details) (USD $)
 6 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2013
Subsequent Event [Member]
Aug. 14, 2013
Subsequent Event [Member]
Short-term Debt [Member]
Jun. 30, 2013
Subsequent Event [Member]
Unit Offering [Member]
Jun. 30, 2013
Subsequent Event [Member]
Unit Offering [Member]
Convertible Promissory Notes [Member]
Subsequent Event [Line Items]          
Short-term Debt, Total     $ 250,000    
Debt Instrument, Interest Rate, Stated Percentage 12.00%       8.00%
Debt Conversion, Converted Instrument, Amount         106,533
Class Of Warrant Or Right Number Of Securities Called By Warrants Or Rights       5,092  
Units Sold In Private Placement Value   190,925   190,925  
Warrants Not Settleable In Cash Fair Value Disclosure       $ 1,291