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The Company expenses all costs that relate to the planning and post-implementation phases of development as product development expense. Costs incurred in the application development phase, consisting principally of payroll and related benefits, are capitalized. 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Under the new guidance, only disposals that represent a strategic shift having a material impact on an entity&#8217;s operations and financial results shall be reported as discontinued operations, with expanded disclosures. 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The core principle of the guidance is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The guidance was originally to be effective for annual and interim periods beginning after December 15, 2016. In August 2015, the FASB approved a one year deferral of the effective date to December 15, 2017 and early adoption is permitted, but not before the original effective date of December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued Accounting Standards Update No. 2016-08: Principal versus Agent Considerations (Reporting Revenue Gross versus Net); this updated guidance clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued Accounting Standards Update No. 2016-10: Identifying Performance Obligations and Licensing, which amends certain aspects of the guidance set forth in the FASB's new revenue standard related to identifying performance obligations and licensing implementation. The Company has not yet selected a transition method for the new revenue guidance and is currently evaluating the effect that such guidance, as well as the new standards indicated above, will have on the consolidated financial statements and related disclosures.</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In June 2014, the FASB issued updated guidance on stock compensation accounting requiring that a performance target that affects vesting and could be achieved after the requisite service period should be treated as a performance condition. Current GAAP does not contain explicit guidance on how to account for such share-based payments.<font style="color: red;">&#160;</font>The Company adopted this amended guidance as of January 1, 2016, noting no material impact on the Company&#8217;s consolidated financial statements and related disclosures.&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 19.85pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In April 2015, the FASB issued updated guidance on the presentation of debt issuance costs in financial statements. The new guidance requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The Company adopted the amendment retrospectively effective January 1, 2016. As a result of the retrospective adoption, the Company reclassified the unamortized deferred financing costs previously recorded in other assets, including $2,087 and $1,888 as of March 31, 2016 and December 31, 2015, respectively, to long-term debt in the consolidated balance sheets. The adoption of this guidance had no impact on the Company&#8217;s statements of operations.</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;&#160;&#160;&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In September 2015, the FASB issued updated guidance on business combinations accounting requiring the acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts is determined. Previously, such adjustments were required to be retrospectively recorded in prior period financial information. The Company adopted this amended guidance as of January 1, 2016, noting no material impact on the Company&#8217;s consolidated financial statements and related disclosures.</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In November 2015, the FASB issued updated guidance on balance sheet classification of deferred taxes, requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities&#8217; processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted. The Company elected to early adopt this guidance on a retrospective basis beginning in the quarter ended December 31, 2015.</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 9.95pt; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In February 2016, the FASB issued updated guidance on leases which, for operating leases, requires a lessee to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee&#8217;s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee&#8217;s right to use, or control the use of, a specified asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with earlier application permitted. The Company is currently evaluating the effects of the adoption and has not yet determined the impact the revised guidance will have on the consolidated financial statements and related disclosures.</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">In March 2016, the FASB issued amended guidance on the accounting for employee share-based payments which requires all excess tax benefits and tax deficiencies to be recognized in the income statement instead of as additional paid-in capital, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the consolidated statement of cash flows from a financing activity to an operating activity, with prospective application required. Additionally, the guidance changes the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes on the consolidated statement of cash flows from an operating activity, previously included in the changes in accounts payable, to a financing activity, with retrospective application required. This amended guidance will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier adoption permitted. The Company is currently evaluating the effects of the adoption and has not yet determined the impact the revised guidance will have on the consolidated financial statements and related disclosures.</p> <p style="widows: 1; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>3. Acquisitions</b></p> <p style="widows: 1; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">&#160;</p> <p style="widows: 1; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>Tea Leaves Health, LLC</b></p> <p style="widows: 1; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">&#160;</p> <p style="widows: 1; text-transform: none; text-indent: 0.5in; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"></p> <p style="widows: 1; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">In August 2015, the Company acquired 100% of the limited liability company membership interests of Tea Leaves Health, LLC (&#8220;Tea Leaves&#8221;), a provider of a SaaS-based marketing and analytics platform for hospital systems to identify and engage consumers and physicians. The purchase price was valued at $29,893, consisting of (i) $15,000 in cash paid at closing; (ii) 327,784 shares of the Company&#8217;s common stock valued at $3,893, issued at closing and held in escrow for potential post-closing working capital and/or indemnification claims; and (iii) $11,000 to be paid within six months of closing in cash, shares of the Company&#8217;s common stock or a combination of cash and shares of the Company&#8217;s common stock, in the Company&#8217;s sole discretion. As a result of $355 working capital and purchase price adjustments, the fair value of the total consideration amounts to $29,538. In February 2016, the Company entered into an amendment to the Membership Interest Purchase Agreement between the Company, Tea Leaves and the other parties thereto. The amendment effected certain modifications to the payment terms of the deferred portion of the guaranteed consideration and the terms of the potential earn-out payment. With respect to the deferred portion of the guaranteed consideration initially scheduled to paid within six months of closing, the payment schedule was amended as follows: (i) $5,000 was payable, and paid in cash, on February 5, 2016; (ii) $3,000 was scheduled to be paid on or prior to June 30, 2016; and (iii) the remainder was scheduled to be paid on or prior to September 30, 2016. For the three months ended March 31, 2016, the Company paid $5,000 plus interest in cash to the former members of Tea Leaves. The remaining $5,828 deferred purchase price and the related interest expense is included in other current liabilities in the accompanying balance sheet as of March 31, 2016&#160;<font style="font-size: 10.5pt;">(see Note 11 for further discussion of the payment of this amount).</font></p> <p style="widows: 1; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">&#160;&#160;</p> <p style="widows: 1; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">In addition to the purchase price, the former members of Tea Leaves are eligible to receive an additional $20,000 (50% in cash and 50% in shares of the Company&#8217;s common stock) based on the achievement of a specified financial target as of December 31, 2016, which, if earned, will be paid in the first quarter of 2017. The February 2016 amendment permits the former members of Tea Leaves to promptly receive $5,000 of the total $20,000 earn-out if the specified financial target is achieved at any time prior to December 31, 2016, and such amount is not subject to forfeiture. If the $5,000 payment is made prior to December 31, 2016, the remaining $15,000 of the earn-out remains subject to achievement of the financial target as of December 31, 2016, and will be paid in the first quarter of 2017, if earned. If the $5,000 payment is not made as the financial target is not met during 2016 but is met as of December 31, 2016, the full $20,000 earn-out payment will be paid in the first quarter of 2017. The earn-out payment is contingent upon the continued employment with the Company of certain former members of Tea Leaves through the respective dates of payment. The Company accrued $3,530 in compensation expense related to the earn-out during the three months ended March 31, 2016, which together with $5,882 accrued during 2015, is reflected in accounts payable and accrued expenses in the accompanying balance sheet as of March 31, 2016. Of the $3,530 accrued earn-out, $2,471 is included in product development expense, $706 is included in sales and marketing expense, and $353 is included in general and administrative expense in the accompanying consolidated statement of operations for the three months ended March 31, 2016.</p> <p style="widows: 1; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 13px 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px;">&#160;</p> <p style="widows: 1; text-transform: none; text-indent: 0.5in; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The acquisition was accounted for as a business combination and, accordingly, the purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on the respective fair values. 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