Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SITO MOBILE, LTD. | |
Entity Central Index Key | 1,157,817 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,681,047 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 9,836,888 | $ 2,615,184 |
Accounts receivable, net | 9,813,623 | 6,167,816 |
Other prepaid expenses | 287,707 | 123,692 |
Total current assets | 19,938,218 | 8,906,692 |
Property and equipment, net | 458,348 | 585,356 |
Other assets | ||
Capitalized software development costs, net | 1,858,921 | 1,600,813 |
Intangible assets: | ||
Patents | 514,327 | 445,473 |
Patent applications cost | 811,248 | 897,087 |
Other intangible assets, net | 1,506,757 | 1,714,477 |
Goodwill | 6,444,225 | 6,444,225 |
Deferred loan costs, net | 47,023 | 78,116 |
Other assets including security deposits | 108,938 | 84,829 |
Total other assets | 11,291,439 | 11,265,020 |
Total assets | 31,688,005 | 20,757,068 |
Current liabilities | ||
Accounts payable | 4,412,043 | 4,828,600 |
Accrued expenses | 1,953,505 | 1,277,896 |
Deferred revenue | 431,780 | 532,909 |
Current obligations under capital lease | 3,402 | 11,699 |
Note payable, net - current portion | 2,475,304 | 3,984,219 |
Total current liabilities | 9,276,034 | 10,635,323 |
Long-term liabilities | ||
Obligations under capital lease | 3,622 | 6,201 |
Note payable, net | 4,644,983 | 4,934,966 |
Total long-term liabilities | 4,648,605 | 4,941,167 |
Total liabilities | 13,924,639 | 15,576,490 |
Commitments and contingencies - See notes 15 | ||
Stockholders' Equity | ||
Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding | ||
Common stock, $.001 par value; 100,000,000 shares authorized, 20,587,770 shares issued and outstanding as of September 30, 2016 and $.001 par value; 300,000,000 shares authorized, 17,157,520 shares issued and outstanding as of December 31, 2015 | 20,587 | 17,156 |
Additional paid-in capital | 157,061,545 | 144,538,247 |
Accumulated deficit | (139,318,766) | (139,374,825) |
Total stockholders' equity | 17,763,366 | 5,180,578 |
Total liabilities and stockholders' equity | $ 31,688,005 | $ 20,757,068 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 300,000,000 |
Common stock, shares issued | 20,587,770 | 17,157,520 |
Common stock, shares outstanding | 20,587,770 | 17,157,520 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue | ||||
Media placement | $ 8,424,099 | $ 3,023,222 | $ 21,583,479 | $ 6,804,752 |
Wireless applications | 1,790,135 | 1,346,642 | 4,735,213 | 4,738,271 |
Licensing and royalties | 127,196 | 144,469 | 388,561 | 419,008 |
Total revenue | 10,341,430 | 4,514,333 | 26,707,253 | 11,962,031 |
Costs and Expenses | ||||
Cost of revenue | 4,648,156 | 2,163,333 | 12,135,274 | 5,614,836 |
Sales and marketing | 2,798,283 | 1,198,469 | 7,561,188 | 2,951,750 |
General and administrative | 1,792,440 | 2,253,446 | 5,143,764 | 4,892,354 |
Loss on impairment of long-lived asset | 831,000 | 831,000 | ||
Depreciation and amortization | 164,269 | 208,891 | 489,073 | 354,333 |
Total costs and expenses | 9,403,148 | 6,655,139 | 25,329,299 | 14,644,273 |
Income (loss) from operations | 938,282 | (2,140,806) | 1,377,954 | (2,682,242) |
Other Income (Expense) | ||||
Interest expense | (436,782) | (475,265) | (1,321,895) | (1,309,700) |
Net income (loss) before income taxes | 501,500 | (2,616,071) | 56,059 | (3,991,942) |
Provision for income taxes | ||||
Net income (loss) | $ 501,500 | $ (2,616,071) | $ 56,059 | $ (3,991,942) |
Basic earnings (loss) per share | $ 0.03 | $ (0.16) | $ 0 | $ (0.25) |
Basic weighted average shares outstanding | 17,433,011 | 16,422,988 | 17,714,960 | 15,735,226 |
Diluted earnings (loss) per share | $ 0.03 | $ (0.16) | $ 0 | $ (0.25) |
Diluted weighted average shares outstanding | 19,573,308 | 16,422,988 | 19,762,037 | 15,735,226 |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2014 | $ 3,076,222 | $ 15,335 | $ 138,006,669 | $ (134,945,782) |
Beginning balance, shares at Dec. 31, 2014 | 15,334,817 | |||
Shares issued on exercise of stock warrants | 2,109,055 | $ 834 | 2,108,221 | |
Shares issued on exercise of stock warrants, shares | 833,700 | |||
Shares issued for payment of services | 210,000 | $ 70 | 209,930 | |
Shares issued for payment of services, shares | 70,000 | |||
Effect of reverse stock split | 138,013 | 138,013 | ||
Effect of reverse stock split, shares | 2,042 | |||
Additional shares issued in acquisition of DoubleVision | 1,067,044 | $ 296 | 1,066,748 | |
Additional shares issued in acquisition of DoubleVision, shares | 296,401 | |||
Additional shares issued in acquisition of intangible assets | 2,544,297 | $ 621 | 2,543,676 | |
Additional shares issued in acquisition of intangible assets, shares | 620,560 | |||
Compensation recognized on option grants | 539,990 | 539,990 | ||
Stock issuance costs | (75,000) | (75,000) | ||
Net income (loss) | (4,429,043) | (4,429,043) | ||
Ending balance at Dec. 31, 2015 | 5,180,578 | $ 17,156 | 144,538,247 | (139,374,825) |
Ending balance, shares at Dec. 31, 2015 | 17,157,520 | |||
Compensation recognized on option grants | 935,123 | 935,123 | ||
Issuance of stock for restructuring of debt | 568,000 | $ 200 | 567,800 | |
Issuance of stock for restructuring of debt, shares | 200,000 | |||
Shares issued on exercise of stock options | 703,605 | $ 164 | 703,441 | |
Shares issued on exercise of stock options, shares | 163,583 | |||
Issuance of common stock | 10,320,001 | $ 3,067 | 10,316,934 | |
Issuance of common stock, Shares | 3,066,667 | |||
Net income (loss) | 56,059 | 56,059 | ||
Ending balance at Sep. 30, 2016 | $ 17,763,366 | $ 20,587 | $ 157,061,545 | $ (139,318,766) |
Ending balance, shares at Sep. 30, 2016 | 20,587,770 |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows from Operating Activities | ||||
Net income (loss) | $ 501,500 | $ (2,616,071) | $ 56,059 | $ (3,991,942) |
Adjustments to reconcile net income (loss) to net cash (used in) operating activities: | ||||
Depreciation expense | 43,774 | 47,117 | 130,489 | 107,665 |
Amortization expense - software development costs | 292,956 | 230,689 | 816,649 | 557,101 |
Amortization expense - patents | 52,744 | 49,001 | 150,863 | 133,895 |
Amortization expense - discount of debt | 200,281 | 165,681 | 570,267 | 458,646 |
Amortization expense - deferred costs | 9,497 | 14,478 | 31,093 | 40,078 |
Amortization expense - intangible assets | 67,750 | 112,773 | 207,720 | 112,773 |
Provision for bad debt | (10,673) | 240,000 | 336,204 | 245,500 |
Loss on disposition of assets | 237 | 4,868 | ||
Loss on impairment of long-lived asset | 831,000 | 831,000 | ||
Stock based compensation | 375,689 | 336,835 | 935,123 | 634,100 |
Changes in operating assets and liabilities: | ||||
(Increase) in accounts receivable, net | (983,224) | (298,682) | (3,982,011) | (1,122,025) |
(Increase) in prepaid expenses | (196,655) | (98,008) | (164,015) | (202,690) |
Decrease (increase) in other assets | 50,000 | (9,965) | 50,370 | |
(Decrease) increase in accounts payable | (2,425,512) | 545,993 | (418,040) | (50,524) |
Increase in accrued expenses | 158,268 | 72,511 | 675,608 | 38,693 |
(Decrease) in deferred revenue | (132,195) | (280,214) | (101,129) | (156,655) |
Increase in accrued interest | 60,567 | 87,116 | 190,502 | 250,738 |
Net cash (used in) operating activities | (1,984,996) | (509,781) | (569,715) | (2,063,277) |
Cash Flows from Investing Activities | ||||
Patents and patent applications costs | (42,803) | (119,869) | (133,877) | (319,441) |
Purchase of property and equipment | (11,050) | (140,922) | (23,197) | (473,243) |
Proceeds from sale of property and equipment | 700 | 700 | ||
Capitalized software development costs | (305,546) | (541,592) | (1,074,756) | (1,197,837) |
Purchase of intangible assets | (1,300,000) | (1,300,000) | ||
Net cash (used in) investing activities | (358,699) | (2,102,383) | (1,231,130) | (3,290,521) |
Cash Flows from Financing Activities | ||||
Proceeds from issuance of common stock | 12,203,605 | 1,909,000 | 12,203,605 | 1,959,000 |
Stock issuance costs | (1,180,000) | (75,000) | (1,180,000) | (75,000) |
Restructuring of debt | (100,000) | |||
Principal reduction on obligation under capital lease | (807) | (4,946) | (9,388) | (14,734) |
Principal reduction on repayment of debt | (525,000) | (1,891,668) | ||
Net cash provided by financing activities | 10,497,798 | 1,829,054 | 9,022,549 | 1,869,266 |
Net increase (decrease) in cash and cash equivalents | 8,154,103 | (783,110) | 7,221,704 | (3,484,532) |
Cash and cash equivalents - beginning of period | 1,682,785 | 2,787,250 | 2,615,184 | 5,488,672 |
Cash and cash equivalents - ending of period | 9,836,888 | 2,004,140 | 9,836,888 | 2,004,140 |
Supplemental Information: | ||||
Interest expense paid | 232,238 | 208,161 | 529,895 | 614,727 |
Income taxes paid | $ 16,900 | $ 4,600 | $ 34,629 | $ 4,600 |
Unaudited Condensed Consolidat7
Unaudited Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Non-cash investing and financing activities: | ||||
Recognized stock-based compensation expense | $ 935,123 | |||
Share based compensation, number of common stock option vested | 700,138 | |||
Common stock price per share | $ 3.40 | $ 3.40 | ||
Aggregate amount of common stock issued | $ 12,203,605 | $ 1,909,000 | $ 12,203,605 | $ 1,959,000 |
Stock issued for exchange of consulting services, shares | 35,000 | |||
Stock issued for exchange of consulting services | $ 119,000 | |||
Fortress Credit Co LLC [Member] | ||||
Non-cash investing and financing activities: | ||||
Issued number of common stock, shares | 200,000 | |||
Hipcricket, Inc. [Member] | ||||
Non-cash investing and financing activities: | ||||
Common stock price per share | $ 4.10 | $ 4.10 | ||
Issued number of common stock, shares | 620,560 | |||
Aggregate amount of common stock issued for acquisitions | $ 2,544,297 | |||
Common Stock [Member] | ||||
Non-cash investing and financing activities: | ||||
Common stock price per share | 2.60 | $ 2.60 | ||
Issued number of common stock, shares | 3,066,667 | 1,820,662 | ||
Aggregate amount of common stock issued | $ 703,604 | |||
Stock issued for exchange of consulting services, shares | 35,000 | |||
Stock issued for exchange of consulting services | $ 91,000 | |||
Common Stock [Member] | Double Vision Networks Inc. [Member] | ||||
Non-cash investing and financing activities: | ||||
Common stock price per share | $ 3.60 | $ 3.60 | ||
Noncash acquisition, Description | Issue additional shares of the Company's common stock to the former DoubleVision shareholders if the Company's media placement revenues for the twelve-month period from August 1, 2014 to July 31, 2015 are at least $3,000,000, subject to certain conditions such as receipt of customer payments and achievement of a gross margin threshold. | |||
Issued number of common stock, shares | 296,402 | |||
Aggregate amount of common stock issued for acquisitions | $ 1,067,044 | |||
Placement revenues | $ 3,000,000 | |||
Common Stock [Member] | Fortress Credit Co LLC [Member] | ||||
Non-cash investing and financing activities: | ||||
Common stock price per share | $ 2.84 | $ 2.84 | ||
Issued number of common stock, shares | 3,430,250 | |||
Aggregate amount of common stock issued | $ 568,000 |
Organization, History and Busin
Organization, History and Business | 9 Months Ended |
Sep. 30, 2016 | |
Organization, History and Business [Abstract] | |
Organization, History and Business | 1. Organization, History and Business SITO Mobile, Ltd. (“the Company”) was incorporated in Delaware on May 31, 2000, under its original name, Hosting Site Network, Inc. On May 12, 2008, the Company changed its name to Single Touch Systems, Inc. and on September 26, 2014, it changed its name to SITO Mobile, Ltd. The Company provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales. Reverse Stock Split On July 29, 2015, the Company filed an amendment to its Restated Certificate of Incorporation to effect a 1-for-10 reverse split of its issued and outstanding common stock. The reverse split became effective in the market on July 30, 2015. Unless otherwise noted, all references herein to the number of common shares, price per common share or weighted average number of common shares outstanding have been adjusted to reflect this reverse stock split on a retroactive basis. Amendments to Articles of Incorporation or Bylaws On March 1, 2016, the Company amended its Certificate of Incorporation to reduce the number of authorized shares of common stock from 300,000,000 to 100,000,000 shares. Change in Fiscal Year On May 5, 2016, the Company elected to transition from a September 30 year-end to a December 31 year-end effective immediately. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Our consolidated financial statements include our accounts, as well as those of our wholly-owned subsidiaries. Our accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements. The consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring natures. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements contained in our Annual Report on Form 10-K/A for the year ended September 30, 2015 and the audited financial statements and notes to the consolidated financial statements contained in our Transition Report on Form 10-KT for the transition period from September 30, 2015 to December 31, 2015. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three months and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2016. Reclassification Certain reclassifications have been made to conform the 2015 amounts to the 2016 classifications for comparative purposes. Principles of Consolidation The accompanying consolidated financial statements include the accounts of SITO Mobile, Ltd. and it’s wholly-owned subsidiaries, SITO Mobile Solutions Inc., SITO Mobile R&D IP, LLC, SITO Mobile Media Inc. and DoubleVision Networks Inc. (“DoubleVision”). Intercompany transactions and balances have been eliminated in consolidation. Cash and Cash Equivalents The Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or less. Accounts Receivable, net Accounts receivable are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. Allowance for Doubtful Accounts An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. Property and Equipment, net Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Depreciation is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes based upon the following estimated useful lives: Software development 2- 3 years Equipment and computer hardware 5 years Office furniture 7 years Leasehold Improvements 5 years Long-Lived Assets The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. Capitalized Software Development Costs The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with ASC Topic 350-40 “Internal-Use Software.” As required by ASC 350-40, the Company capitalizes the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing. Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs are amortized over a period of two to three years. Costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. Capital Leases Assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased assets. The assets are depreciated over the lower of their related lease terms or their estimated productive lives. Depreciation of the assets under capital leases is included in depreciation expense. Debt Issuance Costs Deferred debt issuance costs are amortized using the effective interest method over the related term of the debt and are presented on the balance sheet as a direct deduction from the debt liability. The amortization of deferred debt issuance costs is included in interest expense. Income Taxes The Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes.” The method of accounting for income taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. The Company had no material unrecognized income tax assets or liabilities for the nine months ended September 30, 2016 or for the nine months ended September 30, 2015. The Company recognizes income tax interest and penalties as a separately identified component of general and administrative expense. Issuances Involving Non-cash Consideration All issuances of the Company’s stock for non-cash consideration have been assigned a dollar amount equaling the market value of the shares issued on the date the shares were issued for such services and property. The non-cash consideration paid pertains to consulting services, the acquisition of a software license, the acquisition of DoubleVision Networks Inc. and assets purchased from Hipcricket, Inc. Revenue Recognition The Company recognizes media placement revenue based on the activity of mobile users viewing ads through developer applications and mobile websites. Media placement revenues are recognized when the Company’s advertising services are delivered based on the specific terms of the advertising contract, which are commonly based on the number of ads delivered, or views, clicks or actions by users on mobile advertisements. At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive evidence of an arrangement exists, and collectability is reasonably assured. The Company evaluates whether it is appropriate to recognize media placement revenue based on the gross amount billed to the customers or the net amount earned as revenue. When the Company is directly engaged with an advertising agency or brand, the Company is primarily obligated in a transaction, has latitude in establishing prices, is responsible for fulfillment of the transaction, has credit risk, or has several but not all of these indicators, revenue is recorded on a gross basis. While none of the factors individually are considered presumptive or determinative, in reaching conclusions on gross versus net revenue recognition, the Company places the most weight on the analysis of whether or not it is the primary obligor in the arrangement. When the Company is engaged with a sales partner who deals directly with an agency or brand, the Company records the net amounts as media placement revenue earned if it is not primarily obligated or does not have latitude in establishing prices or credit risk. The Company recognizes wireless applications revenue based on the delivery of Short Message Service (SMS) text messages and voice messages and messaging program management services. Wireless applications revenues are recognized when the Company’s services are delivered based on the specific terms of the Company’s contracts with customers, which are commonly based on the number of messages delivered. At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive evidence of an arrangement exists, and collectability is reasonably assured. In general, licensing and royalty revenue arrangements provide for the payment of contractually determined fees in consideration for the patented technologies owned by or controlled by the Company’s operating subsidiary. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, the Company’s operating subsidiary may have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on the Company’s operating subsidiary’s part to maintain or upgrade the technology, or provide future support or services Generally, the agreements provide for the grant of licenses, covenants-not-to-sue, releases, and other significant deliverables upon the execution of the agreement, or upon the receipt off the minimum upfront payment for term agreement renewals. As such, when the Company has no further obligation under the agreement, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all the other revenue recognition criteria have been met, otherwise the Company recognizes revenue on a straight-line basis over the life of the agreement based on the contractually determined fees. Deferred revenue arises as a result of differences between the timing of revenue recognition and receipt of cash from the Company’s customers. Stock Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. The Company records compensation expense based on the fair value of the award at the reporting date. The value of the stock-based award is determined using the Binomial or Black-Scholes option-pricing models, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the stock. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. Earnings (Loss) per Share The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share are computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings per share has been presented for the three months ended September 30, 2016 due to the Company’s net income position for the three months ended September 30, 2016. On July 29, 2015, the Company filed an amendment to the Certificate of Incorporation to effect a 1-for-10 reverse split of its issued and outstanding common stock the reverse split became effective in the market on July 30, 2015. Following the reverse split, every ten shares of the Company's issued and outstanding common stock were automatically combined and converted into one issued and outstanding share of common stock with a par value of $0.001 per share. No fractional shares are to be issued. As a result, all prior per share calculations reflect the effects of this reverse stock split. Concentrations of Credit Risk The Company primarily transacts its business with one financial institution. The amount on deposit in that one institution may from time to time exceed the federally-insured limit. Of the Company’s revenue earned during the nine months ended September 30, 2016, approximately 17% was generated from contracts with five customers covered under the Company’s master services agreement with AT&T and approximately 16% was generated from contracts with an advertising agency. Of the Company’s revenue earned during the nine months ended September 30, 2015, approximately 38% was generated from contracts with six customers covered under the Company’s master services agreement with AT&T and approximately 6% was generated from contracts with an advertising agency. The Company’s accounts receivable is typically unsecured and are derived from U.S. customers in different industries. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such losses have been within management’s expectations. As of September 30, 2016, and 2015, two customers accounted for 36% and 41%, respectively, of the Company’s net accounts receivable balance, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Business Combinations The Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. The Company expenses all costs as incurred related to an acquisition under general and administrative in the consolidated statements of operations. Recent Accounting Pronouncements There are no new recent accounting pronouncements not previously disclosed. |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Sep. 30, 2016 | |
Accounts Receivable, net [Abstract] | |
Accounts Receivable, net | 3. Accounts Receivable, net Accounts receivable consist of the following: September 30, 2016 December 31, 2015 Accounts receivable $ 10,073,575 $ 6,212,600 Less allowance for bad debts (259,952 ) (44,784 ) Accounts receivable, net $ 9,813,623 $ 6,167,816 |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Sep. 30, 2016 | |
Property and Equipment, net [Abstract] | |
Property and Equipment, net | 4. Property and Equipment, net The following is a summary of property and equipment: September 30, 2016 December 31, 2015 Equipment and computer hardware $ 673,773 $ 727,289 Office furniture 202,586 233,219 Leasehold improvements 186,902 186,902 Equipment held under capital lease 66,272 66,272 1,129,533 1,213,682 Less: accumulated depreciation (671,185 ) (628,326 ) $ 458,348 $ 585,356 Depreciation expense for the three and nine months ended September 30, 2016 was $43,774 and $130,489, respectively. Depreciation expense for the three and nine months ended September 30, 2015 was $47,117 and $107,665, respectively. |
Capitalized Software Developmen
Capitalized Software Development Costs, net | 9 Months Ended |
Sep. 30, 2016 | |
Capitalized Software Development Costs, net [Abstract] | |
Capitalized Software Development Costs, net | 5. Capitalized Software Development Costs, net The following is a summary of capitalized software development costs: September 30, 2016 December 31, 2015 Beginning balance $ 1,600,813 $ 762,661 Additions 1,074,757 1,615,029 Less: accumulated amortization (816,649 ) (776,877 ) Ending balance $ 1,858,921 $ 1,600,813 Amortization expense for the three and nine months ended September 30, 2016 was $292,956 and $816,649, respectively. Amortization expense for the three and nine months ended September 30, 2015 was $230,689 and $557,101, respectively. As of September 30, 2016, amortization expense for the remaining estimated lives of these costs is as follows: Year Ending September 30, 2017 $ 915,391 2018 722,100 2019 221,430 $ 1,858,921 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Intangible Assets [Abstract] | |
Intangible Assets | 6. Intangible Assets Patents The following is a summary of capitalized patent costs: September 30, 2016 December 31, 2015 Patent costs $ 1,577,122 $ 1,357,407 Less: accumulated amortization (1,062,795 ) (911,934 ) $ 514,327 $ 445,473 Amortization expenses for the three and nine months ended September 30, 2016 was $52,744 and $150,863, respectively. Amortization expenses for the three and nine months ended September 30, 2015 was $49,001 and $133,895, respectively. A schedule of amortization expense over the estimated remaining lives of the patents is as follows: Year Ending September 30, 2017 $ 143,883 2018 79,431 2019 73,268 2020 73,268 Thereafter 144,477 $ 514,327 Other Intangible Assets, net The following is a summary of other intangible asset costs: September 30, 2016 December 31, 2015 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Backlog - 110,000 Less: accumulated amortization (333,243 ) (235,523 ) $ 1,506,757 $ 1,714,477 Amortization expenses for the three and nine months ended September 30, 2016 was $67,750 and $207,720, respectively. Amortization expenses for the three and nine months ended September 30, 2015 was $112,773 and $112,773, respectively. The intangible asset for backlog was fully amortized as of February 2016. A schedule of amortization expense over the estimated remaining lives of the other intangible assets is as follows: Year Ending September 30, 2017 $ 271,000 2018 271,000 2019 271,000 2020 231,036 2021 97,000 Thereafter 365,721 $ 1,506,757 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2016 | |
Accrued Expenses [Abstract] | |
Accrued Expenses | 7. Accrued Expenses The following is a summary of accrued expenses: September 30, 2016 December 31, 2015 Accrued cost of revenues $ 757,146 $ 168,983 Accrued payroll and related expenses 1,089,358 380,943 Accrued professional fees 31,651 627,124 Other accrued expenses 75,350 100,846 $ 1,953,505 $ 1,277,896 |
Capital Leases
Capital Leases | 9 Months Ended |
Sep. 30, 2016 | |
Capital Leases [Abstract] | |
Capital Leases | 8. Capital Leases The Company leases various office equipment under multiple capital leases that expire in 2016 and 2018. The equipment has a cost of $66,272. Minimum future lease payments under the capital leases at September 30, 2016 for each of the next four years and in the aggregate are as follows: Year Ending September 30, 2017 $ 3,790 2018 3,790 2019 - 2020 - Total minimum lease payments 7,580 Less amount representing interest (556 ) Present value of net minimum lease payments $ 7,024 The effective interest rate charged on the capital leases range from approximately 2.25% to 7.428% per annum. The leases provide for a $1 purchase option. Interest charged to operations for the three and nine months ended September 30, 2016 was $140 and $515, respectively. Interest charged to operations for the three and nine months ended September 30, 2015 was $276 and $931, respectively. Depreciation charged to operations for the three and nine months ended September 30, 2016 was $3,314 and $9,941, respectively. Depreciation charged to operations for the three and nine months ended September 30, 2015 was $3,314 and $9,941, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 9. Income Taxes As of September 30, 2016, the Company has a net operating loss carryover of approximately $39,600,000 available to offset future income for income tax reporting purposes, which will expire in various years through 2035, if not previously utilized. However, the Company’s ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382. We adopted the provisions of ASC 740-10-50. We had no material unrecognized income tax assets or liabilities for the nine months ended September 30, 2016 or for the nine months ended September 30, 2015. Our policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the three and nine months ended September 30, 2016 and 2015, there were no federal income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years ending on or before September 30, 2012 or California state income tax examination by tax authorities for years ending on or before September 30, 2011. We are not currently involved in any income tax examinations. |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2016 | |
Note Payable [Abstract] | |
Note Payable | 10. Note Payable September 30, 2016 December 31, 2015 Notes Payable: Principal outstanding $ 7,441,664 $ 9,333,332 Accrued Interest 434,443 319,418 Accrued Termination Fee 235,853 160,376 8,111,960 9,813,126 Less: discount on note payable (991,673 ) (893,941 ) 7,120,287 8,919,185 Less: current portion, net (2,475,304 ) (3,984,219 ) Long-term portion, net $ 4,644,983 $ 4,934,966 Scheduled maturities on long-term debt are as follows: Years ending September 30, Principal Discount Amortization Accrued Interest Accrued Termination Fee Total 2017 $ 3,150,000 $ (726,769 ) $ 52,073 $ - $ 2,475,304 2018 4,291,664 (264,904 ) 382,370 235,853 4,644,983 $ 7,441,664 $ (991,673 ) $ 434,443 $ 235,853 $ 7,120,287 On October 3, 2014, the Company and its wholly owned subsidiaries, SITO Mobile Solutions, Inc. and SITO Mobile R&D IP, LLC, entered into a Revenue Sharing and Note Purchase Agreement (the “Fortress Agreement”) with Fortress Credit Co LLC, as collateral agent (the “Collateral Agent”), and CF DB EZ LLC (the “Revenue Participant”) and Fortress Credit Co LLC (the “Note Purchaser” and together with the Revenue Participant, the “Investors”). At the closing of the Fortress Agreement, the Company issued and sold a senior secured note (the “Note”) with an aggregate original principal amount of $10,000,000 (the “Original Principal Amount”) and issued, pursuant to a Subscription Agreement, 261,954 new shares of common stock to Fortress at $3.817 per share (which represents the trailing 30-day average closing price) for an aggregate amount of $1,000,000. After deducting original issue discount of 10% on the Notes and a structuring fee to the Investors, the Company received $8,850,000 before paying legal and due diligence expenses. The principal amount of the Note bears interest at a rate equal to LIBOR plus 9% per annum. Such interest is payable in cash except that 2% per annum of the interest shall be paid-in-kind, by increasing the principal amount of the Note by the amount of such interest. The term of the Note is 42 months and the Company must make, beginning in October 2015, monthly amortization payments on the Note, each in a principal amount equal to $333,334 until the Note is paid in full. The Company shall also apply 85% of Monetization Revenues (as defined in the Agreement) from the Company’s patents to the payment of accrued and unpaid interest on, and then to repay outstanding principal (at par) of, the Note until all amounts due with respect to the Note have been paid in full. After the repayment of the Note, in addition to interest, the Company shall pay the Revenue Participants up to 50% of Monetization Revenues totaling (i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter (the “Revenue Stream”). The Company must also pay $350,000 to the Note Purchaser upon repayment of the Note. The Company may prepay the Note in whole or in part, without penalty or premium, except that any optional prepayments of the Note prior to the first anniversary of the Effective Date shall be accompanied by a prepayment premium equal to 5% of the principal amount prepaid. The Agreement contains certain standard Events of Default. The Company granted to the Collateral Agent, for the benefit of the Secured Parties, a non-exclusive, royalty free, license (including the right to grant sublicenses) with respect to the Patents, which shall be evidenced by, and reflected in, the Patent License Agreement. The Collateral Agent and the Investors agree that the Collateral Agent shall only use such license following an Event of Default. Pursuant to a Security Agreement among the parties, the Company granted the Investors a first priority senior security interest in all of the Company’s assets. The Company and the Investors assigned a value of $500,000 to the revenue sharing terms of the Agreement and in accordance with ASC 470-10-25 “Debt Recognition”, the Company recognized $500,000 as deferred revenue and a discount on the Note that is amortized over the 42-month term of the Note using the effective interest method. For the three and nine months ended September 30, 2016, the Company recognized $32,934 and $107,823, respectively, in licensing revenue and interest expense from amortization of the deferred revenue. For the three and nine months ended September 30, 2015, the Company recognized $50,207 and $138,984, respectively, in licensing revenue and interest expense from amortization of the deferred revenue. On March 1, 2016, the Company entered into Amendment No.1 (the “Amendment”) of the Fortress Agreement. Pursuant to the terms of the Amendment, principal payment on the Notes issued pursuant to the Agreement were reduced from $333,333 to $175,000 for the period commencing on the last business day of February 2016 through the last business day of February 2017 and from $333,333 to $300,000 for the period commencing on the last business day of March 2017 to the last day of business on February 2018, with the final payment on the last business day on March 2018 increased to repay the remaining principal in full. In consideration for the Amendment, the Company agreed to pay a restructuring fee of $100,000 and issue 200,000 shares of its common stock with an aggregate value of $568,000 to the Investors. Interest expense on the Note for the three and nine months ended September 30, 2016 was $203,681 and $644,405, respectively. Amortization of the discounts for the three and nine months ended September 30, 2016 totaled $200,281 and $570,267, respectively, which was charged to interest expense. Accrual of termination fees for the three and nine months ended September 30, 2016 was $23,054 and $75,476, respectively, which was charged to interest expense. Interest expense on the Note for the three and nine months ended September 30, 2015 was $259,857 and $767,245, respectively. Amortization of the discounts for the three and nine months ended September 30, 2015 totaled $165,681 and $458,646, respectively, which was charged to interest expense. Accrual of termination fees for the three and nine months ended September 30, 2015 was $35,145 and $97,289, respectively, which was charged to interest expense. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Stock Based Compensation [Abstract] | |
Stock Based Compensation | 11. Stock Based Compensation During the nine months ended September 30, 2016, the Company recognized stock-based compensation expense totaling $935,123, through the vesting of 700,138 common stock options. Of the $935,123 in stock compensation expense, $715,033 is included in general and administrative expense and $220,090 is included in sales and marketing expense. During the nine months ended September 30, 2015, the Company recognized stock-based compensation expense totaling $634,100, which $210,000 was for payment of consulting services through the issuance of 70,000 common shares, and $386,061 was recognized through the vesting of 55,945 common stock options. Of the $386,061 in stock compensation expense, $319,540 is included in general and administrative expense and $66,521 is included in sales and marketing expense. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions On April 21, 2014 (the “Effective Date”), SITO Mobile R&D IP, LLC, the Company’s wholly-owned subsidiary, through a joint venture arrangement organized as a limited liability company (the “JV”) with Personalized Media Communications, LLC (“PMC”), entered into a Joint Licensing Program Agreement (the “Agreement”) with a national broadcasting entity (“Licensee”) pursuant to which the JV granted the Licensee a term-limited license ( the “License”) to all patents licensable by the JV (“Patents”), including an exclusive license to assert the Patents against certain infringing parties in the media distribution industry. In exchange for the License, the Licensee will pay an annual fee of $1,250,000 for a minimum of three years (“Annual Fee”). Commencing three years from the Effective Date, the Licensee may each year, at its sole option, pay a $1,250,000 license fee to renew the License for every year for four additional years. Once the Licensee has paid a total of $8,750,000 in license fees, either in one lump sum or after paying $1,250,000 annually for seven years, the License is deemed to be perpetual. For Patents infringement actions provided for under the License, the Licensee will pay 20% of the gross proceeds from settlements received less any Annual Fee amounts paid and litigation costs incurred (“Share of Proceeds”). SITO Mobile R&D IP, LLC and its joint venture partner will serve as co-plaintiffs with the Licensee in infringement actions under the License and the Licensee will be responsible for any out-of-pocket costs of the JV associated with being a co-plaintiff in supporting Licensee in such litigation, including attorneys’ fees. The Licensee will pay the Annual Fee and any Share of Proceeds to the JV. Proceeds received by the JV are shared by SITO Mobile R&D IP, LLC and PMC on a 30% and 70% basis, respectively. In the event that the Licensee does not assert any infringement actions under its rights in the License within five years of the Effective Date, the JV may, at its sole option, choose to terminate Licensee’s exclusive right to assert infringement claims with no reduction or adjustment to the Annual Fee. For the three and nine months ended September 30, 2016, the Company amortized $94,262 and $280,738, respectively, in revenue. As of September 30, 2016, the Company has $209,016 in deferred revenue under the Licensing Agreement. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value [Abstract] | |
Fair Value | 13. Fair Value The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization. The Company determines the fair value of obligations under capital lease, notes payable and convertible debentures based on the effective yields of similar obligations (Level 2). ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, which are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below: Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company did not identify any assets and liabilities that are required to be presented on the consolidated balance sheets at fair value. The Company does not have any assets or liabilities measured at fair value on a recurring basis at September 30, 2016. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2016. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | 14. Stockholders’ Equity Common Stock The holders of the Company's common stock are entitled to one vote per share of common stock held. During the nine months ended September 30, 2016, the Company issued 3,430,250 shares of its common stock of which 200,000 shares were issued to Fortress Credit Co LLC at $2.84 per share for an aggregate amount $568,000, in consideration for the amendment of the Fortress Agreement, 163,583 shares were issued for options exercised for which the Company received $703,604 in gross proceeds, and the Company received $10,320,001 in proceeds net of legal and accounting services in connection with the registration and issuance of 3,066,667 shares of common stock. During the nine months ended September 30, 2015, the Company issued 1,820,662 shares of common stock of which 833,700 shares were issued for warrants exercised for which the Company received $2,109,055 in gross proceeds, issued 70,000 shares for which the Company received consulting services valued at $210,000, issued 296,402 in connection with the purchase agreement with DoubleVision Networks, Inc. and issued 620,560 shares in connection with the asset purchase agreement with Hipcricket, Inc. Warrants During the nine months ended September 30, 2016, no warrants were granted or exercised. During the nine months ended September 30, 2015, no warrants were granted, 729,100 warrants exercised to purchase 729,100 shares of the Company’s common stock of which 684,000 at an exercise price of $2.50, and 45,100 warrants had an exercise price of $3.40 per share, and no warrants expired. Options During the nine months ended September 30, 2016, the Company granted options to its directors and employees as follows: Grant Date Options Granted Exercise Price Expiration Vesting Total Value Risk Free Interest Rate Volatility February 18, 2016 30,000 $ 2.58 February 18, 2021 Immediately $ 52,560 1.15 % 103.90 % February 18, 2016 20,000 $ 2.58 February 18, 2021 Immediately $ 35,040 1.15 % 103.90 % February 18, 2016 25,000 $ 2.58 February 18, 2021 Immediately $ 43,800 1.15 % 103.90 % February 18, 2016 20,000 $ 2.58 February 18, 2021 3-years $ 35,040 1.15 % 103.90 % February 18, 2016 20,000 $ 2.58 February 18, 2021 Immediately $ 35,040 1.15 % 103.90 % February 18, 2016 25,000 $ 2.58 February 18, 2021 Immediately $ 43,800 1.15 % 103.90 % May 5, 2016 125,000 $ 2.95 May 5, 2019 3-years $ 283,500 1.26 % 91.52 % May 5, 2016 21,704 $ 2.95 May 5, 2019 3-years $ 49,225 1.26 % 91.52 % May 5, 2016 12,000 $ 2.95 May 5, 2019 3-years $ 27,216 1.26 % 91.52 % August 9, 2016 20,000 $ 4.00 August 9, 2023 Immediately $ 59,800 1.35 % 92.34 % August 9, 2016 300,000 $ 4.00 August 9, 2023 3-years $ 897,000 1.35 % 92.34 % August 9, 2016 75,000 $ 4.00 August 9, 2023 3-years $ 224,250 1.35 % 92.34 % 693,704 The Company values options under the Binomial Option Model. The full value of option grants is charged to operations over the vesting period with option grants that vest immediately being fully charged on the date of grant. A summary of outstanding stock warrants and common stock options is as follows: Number of Shares Weighted Average Exercise Price Outstanding – December 31, 2014 3,448,726 $ 4.90 Granted 474,281 3.60 Exercised (833,700 ) 2.50 Cancelled (496,050 ) (8.10 ) Outstanding – December 31, 2015 2,593,257 $ 4.80 Granted 693,704 1.30 Exercised (163,583 ) (4.30 ) Cancelled (1,266,510 ) (5.40 ) Outstanding – September 30, 2016 1,856,868 $ 3.10 Of the 1,856,868 common stock options outstanding, 700,138 options are fully vested and currently available for exercise. Of the common stock options outstanding, 70,000 options will be cancelled if not exercised during the three months ended December 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 15. Commitments and Contingencies Operating Leases The Company leases office space in Jersey City, New Jersey; Boise, Idaho; Chicago, Illinois; and Sylvan Lake, Michigan. The Company’s Boise office space is subject to a 38-month lease that commenced on May 1, 2014. The Jersey City office lease, amended on November 6, 2014, expires on November 30, 2018 and the Company has the option to extend the term for an additional five years. In addition to paying rent, under the terms of the Jersey City office lease the Company is also required to pay its pro rata share of the property’s operating expenses. The Company entered into a sub-lease agreement on June 24, 2016 for an office in Michigan. The term for the office space is month to month. Rent expense for the three months ended September 30, 2016 and 2015 was $80,307 and $95,925, respectively. Rent expense for the nine months ended September 30, 2016 and 2015 was $292,521 and $275,783, respectively. Minimum future rental payments under non-cancellable operating leases with terms in excess of one year as of September 30, 2016 for the next five years and in the aggregate are: 2017 $ 276,669 2018 256,608 2019 42,768 2020 - 2021 - $ 576,045 Incentive Compensation On November 18, 2015, the Company approved a compensation plan for its executive officers which provides for the payment of a cash bonus and an equity grant of performance options to the Company’s Chief Executive Officer and its Chief Financial Officer (the “Executives”). Each Executive was eligible for an annual cash bonus, based upon net revenue, gross margins, and individual key performance indicators, set annually by the Company’s Compensation Committee (the “Target Performance”). For the period ended September 30, 2016, the target bonus for the Chief Executive Officer was 50% of his base salary and for the Chief Financial Officer, the target bonus was 40% of his base salary. The cash bonus was based upon the target net revenues and gross margins of the Company. 70% of the target cash bonus was payable if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus was payable if the Target Performance is reached, with 120% of the cash bonus paid if 120% of the Target Performance is achieved. As of September 30, 2016, there were no cash payouts for the incentive compensation plan. The equity grant component of the compensation plan provided for the grant of 110,000 performance options to purchase shares of common stock to the Chief Executive Officer and 50,000 performance options to purchase shares of common stock to the Chief Financial Officer, with the number of performance options to be received by each of the Executives based upon the achievement by the Company of certain net revenues and gross margins targets. The performance options vest in annual increments over three years commencing on the grant date and are exercisable at a price of $3.51. During the three and nine months ended September 30, 2016, the Company recognized $55,098 and $165,294, respectively, in stock compensation expense for the performance options. On November 18, 2015, the Company approved a compensation plan for three employees of the Company which provides for the payment of a cash bonus and an equity grant of performance options. Two of the Employees are eligible for an annual cash bonus, based upon net revenue, and gross margins, set annually by the Company’s Compensation Committee (the “Target Performance”). For the period ended September 30, 2016, the target bonus ranges from 20-30% of their base salary. 70% percent of the cash bonus is based upon the target net revenues and 30% of the cash bonus is based upon gross margins of the Company. Seventy percent of the target cash bonus will be paid if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus will be paid if the Target Performance is reached, with 120% of the cash bonus paid if 120% of the Target Performance is achieved. As of September 30, 2016, the Company has accrued $91,287 in compensation expense for the potential incentive cash bonuses. The equity grant component of the compensation plan provides for the grant of 28,000 performance options to purchase shares of Company common stock to each of the three Employees, with the number of performance options to be received by each of the Employees based upon the achievement by the Company of certain net revenues and gross margins targets. The performance options will vest in three year increments commencing on the grant date and are exercisable at a price of $3.51. During the three and nine months ended September 30, 2016, the Company recognized $25,827 and $77,481, respectively, in stock compensation expense for the performance options. On February 18, 2016, the Company granted 120,000 options to directors of the Company with an exercise price of $2.58, which automatically vested. For the three and nine months ended September 30, 2016, the Company recognized $0 and $210,240, respectively, in expense for the options. On May 5, 2016, the Company granted 158,704 options to three employees of the Company. The options will vest in three year increments commencing on the grant date and are exercisable at a price of $2.95. During the three and nine months ended September 30, 2016, the Company recognized $68,698 and $88,695, respectively, in stock compensation expense for the performance of options. On August 9, 2016, the Company granted 20,000 options to a director of the Company with an exercise price of $4.00, which automatically vested. For the three and nine months ended September 30, 2016, the Company recognized $59,800 and $59,800, respectively, in expense for the options. On August 9, 2016, the Company granted 375,000 options to the Executives. The options will vest in three year increments commencing on the grant date and are exercisable at a price of $4.00. During the three and nine months ended September 30, 2016, the Company recognized $97,624 and $97,624, respectively, in stock compensation expense for the options. On August 9, 2016, the Company approved a compensation plan for the quarter ending December 31, 2016 for the Executives which provides for the payment of a cash bonus and an equity grant of performance options to the Company’s Chief Executive Officer and its Chief Financial Officer (the “Executives”). Each Executive was eligible for a quarterly cash bonus, based upon net revenue, gross margins, and individual key performance indicators, set by the Company’s Compensation Committee (the “Target Performance”). The target bonus for the Chief Executive Officer was 50% of his base salary and for the Chief Financial Officer, the target bonus was 40% of his base salary. The cash bonus was based upon the target net revenues and gross margins of the Company. 70% of the target cash bonus was payable if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus was payable if the Target Performance is reached, with 140% of the cash bonus paid if 140% of the Target Performance is achieved. As of September 30, 2016, there were no cash payouts for this incentive compensation plan. The equity grant component of the compensation plan provided for the grant of 27,500 performance options to purchase shares of common stock to the Chief Executive Officer and 12,500 performance options to purchase shares of common stock to the Chief Financial Officer, with the number of performance options to be received by each of the Executives based upon the achievement by the Company of certain net revenues and gross margins targets. On August 9, 2016, the Company approved a compensation plan for the quarter ended December 31, 2016 for four employees of the Company which provides for the payment of a cash bonus and an equity grant of performance options. Three of the employees are eligible for a quarterly cash bonus, based upon net revenue, and gross margins, set by the Company’s Compensation Committee (the “Target Performance”). The target bonus ranges from 20-30% of their base salary. Seventy percent of the cash bonus is based upon the target net revenues and 30% of the cash bonus is based upon gross margins of the Company. 70% of the target cash bonus will be paid if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus will be paid if the Target Performance is reached, with 140% of the cash bonus paid if 140% of the Target Performance is achieved. As of September 30, 2016, the Company has not accrued compensation expense for the potential incentive cash bonuses. The equity grant component of the compensation plan provides for the grant of 6,250 performance options to purchase shares of Company common stock to each of the four Employees, with the number of performance options to be received by each of the Employees based upon the achievement by the Company of certain net revenues and gross margins targets. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events Since September 30, 2016, 93,277 shares of stock option grants were exercised at grant prices ranging from $2.25 to $4.69 per share for aggregate purchase proceeds of $365,469. On November 9, 2016, the Company’s Board of Directors approved an increase in the base salary of the Company’s Chief Executive Officer from $300,000 to $350,000 and an increase in the base salary of its Chief Financial Officer from $225,000 to $275,000. The Board of Directors also approved an increase in the target bonus of the Chief Executive Officer to 60% of his base salary and an increase in the target bonus to 50% of the base salary of the Chief Financial Officer. On November 9, 2016, the Company’s Board of Directors approved the grant of three-year options to purchase 85,296 total shares of common stock with an exercise price of $4.74 per share to certain employees. The options shall expire upon the earlier of November 9, 2023 or three months after the cessation of service, whichever is sooner. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Reclassification | Reclassification Certain reclassifications have been made to conform the 2015 amounts to the 2016 classifications for comparative purposes. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of SITO Mobile, Ltd. and it’s wholly-owned subsidiaries, SITO Mobile Solutions Inc., SITO Mobile R&D IP, LLC, SITO Mobile Media Inc. and DoubleVision Networks Inc. (“DoubleVision”). Intercompany transactions and balances have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or l. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Depreciation is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes based upon the following estimated useful lives: Software development 2- 3 years Equipment and computer hardware 5 years Office furniture 7 years Leasehold Improvements 5 years |
Long-Lived Assets | Long-Lived Assets The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with ASC Topic 350-40 “Internal-Use Software.” As required by ASC 350-40, the Company capitalizes the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing. Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs are amortized over a period of two to three years. Costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. |
Capital Leases | Capital Leases Assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased assets. The assets are depreciated over the lower of their related lease terms or their estimated productive lives. Depreciation of the assets under capital leases is included in depreciation expense. |
Debt issuance costs | Debt Issuance Costs Deferred debt issuance costs are amortized using the effective interest method over the related term of the debt and are presented on the balance sheet as a direct deduction from the debt liability. The amortization of deferred debt issuance costs is included in interest expense. |
Income Taxes | Income Taxes The Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes.” The method of accounting for income taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities. The Company had no material unrecognized income tax assets or liabilities for the nine months ended September 30, 2016 or for the nine months ended September 30, 2015. The Company recognizes income tax interest and penalties as a separately identified component of general and administrative expense. |
Issuances Involving Non-cash Consideration | Issuances Involving Non-cash Consideration All issuances of the Company’s stock for non-cash consideration have been assigned a dollar amount equaling the market value of the shares issued on the date the shares were issued for such services and property. The non-cash consideration paid pertains to consulting services, the acquisition of a software license, the acquisition of DoubleVision Networks Inc. and assets purchased from Hipcricket, Inc. |
Revenue Recognition | Revenue Recognition The Company recognizes media placement revenue based on the activity of mobile users viewing ads through developer applications and mobile websites. Media placement revenues are recognized when the Company’s advertising services are delivered based on the specific terms of the advertising contract, which are commonly based on the number of ads delivered, or views, clicks or actions by users on mobile advertisements. At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive evidence of an arrangement exists, and collectability is reasonably assured. The Company evaluates whether it is appropriate to recognize media placement revenue based on the gross amount billed to the customers or the net amount earned as revenue. When the Company is directly engaged with an advertising agency or brand, the Company is primarily obligated in a transaction, has latitude in establishing prices, is responsible for fulfillment of the transaction, has credit risk, or has several but not all of these indicators, revenue is recorded on a gross basis. While none of the factors individually are considered presumptive or determinative, in reaching conclusions on gross versus net revenue recognition, the Company places the most weight on the analysis of whether or not it is the primary obligor in the arrangement. When the Company is engaged with a sales partner who deals directly with an agency or brand, the Company records the net amounts as media placement revenue earned if it is not primarily obligated or does not have latitude in establishing prices or credit risk. The Company recognizes wireless applications revenue based on the delivery of Short Message Service (SMS) text messages and voice messages and messaging program management services. Wireless applications revenues are recognized when the Company’s services are delivered based on the specific terms of the Company’s contracts with customers, which are commonly based on the number of messages delivered. At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive evidence of an arrangement exists, and collectability is reasonably assured. In general, licensing and royalty revenue arrangements provide for the payment of contractually determined fees in consideration for the patented technologies owned by or controlled by the Company’s operating subsidiary. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, the Company’s operating subsidiary may have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on the Company’s operating subsidiary’s part to maintain or upgrade the technology, or provide future support or services Generally, the agreements provide for the grant of licenses, covenants-not-to-sue, releases, and other significant deliverables upon the execution of the agreement, or upon the receipt off the minimum upfront payment for term agreement renewals. As such, when the Company has no further obligation under the agreement, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all the other revenue recognition criteria have been met, otherwise the Company recognizes revenue on a straight-line basis over the life of the agreement based on the contractually determined fees. Deferred revenue arises as a result of differences between the timing of revenue recognition and receipt of cash from the Company’s customers. |
Stock Based Compensation | Stock Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. The Company records compensation expense based on the fair value of the award at the reporting date. The value of the stock-based award is determined using the Binomial or Black-Scholes option-pricing models, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the stock. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. |
Earnings (Loss) per Share | Earnings (Loss) per Share The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share are computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings per share has been presented for the three months ended September 30, 2016 due to the Company’s net income position for the three months ended September 30, 2016. On July 29, 2015, the Company filed an amendment to the Certificate of Incorporation to effect a 1-for-10 reverse split of its issued and outstanding common stock the reverse split became effective in the market on July 30, 2015. Following the reverse split, every ten shares of the Company's issued and outstanding common stock were automatically combined and converted into one issued and outstanding share of common stock with a par value of $0.001 per share. No fractional shares are to be issued. As a result, all prior per share calculations reflect the effects of this reverse stock split. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company primarily transacts its business with one financial institution. The amount on deposit in that one institution may from time to time exceed the federally-insured limit. Of the Company’s revenue earned during the nine months ended September 30, 2016, approximately 17% was generated from contracts with five customers covered under the Company’s master services agreement with AT&T and approximately 16% was generated from contracts with an advertising agency. Of the Company’s revenue earned during the nine months ended September 30, 2015, approximately 38% was generated from contracts with six customers covered under the Company’s master services agreement with AT&T and approximately 6% was generated from contracts with an advertising agency. The Company’s accounts receivable is typically unsecured and are derived from U.S. customers in different industries. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such losses have been within management’s expectations. As of September 30, 2016, and 2015, two customers accounted for 36% and 41%, respectively, of the Company’s net accounts receivable balance, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Business Combinations | Business Combinations The Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. The Company expenses all costs as incurred related to an acquisition under general and administrative in the consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There are no new recent accounting pronouncements not previously disclosed. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of property and equipment, net estimated useful lives | Software development 2- 3 years Equipment and computer hardware 5 years Office furniture 7 years Leasehold Improvements 5 years |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounts Receivable, net [Abstract] | |
Schedule of accounts receivable | September 30, December 31, Accounts receivable $ 10,073,575 $ 6,212,600 Less allowance for bad debts (259,952 ) (44,784 ) Accounts receivable, net $ 9,813,623 $ 6,167,816 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property and Equipment, net [Abstract] | |
Summary of property and equipment | September 30, 2016 December 31, 2015 Equipment and computer hardware $ 673,773 $ 727,289 Office furniture 202,586 233,219 Leasehold improvements 186,902 186,902 Equipment held under capital lease 66,272 66,272 1,129,533 1,213,682 Less: accumulated depreciation (671,185 ) (628,326 ) $ 458,348 $ 585,356 |
Capitalized Software Developm28
Capitalized Software Development Costs, net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Capitalized Software Development Costs, net [Abstract] | |
Summary of capitalized software development costs | September 30, December 31, Beginning balance $ 1,600,813 $ 762,661 Additions 1,074,757 1,615,029 Less: accumulated amortization (816,649 ) (776,877 ) Ending balance $ 1,858,921 $ 1,600,813 |
Summary of amortization expense for the estimated lives | Year Ending September 30, 2017 $ 915,391 2018 722,100 2019 221,430 $ 1,858,921 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of capitalized patent costs | September 30, December 31, Patent costs $ 1,577,122 $ 1,357,407 Less: accumulated amortization (1,062,795 ) (911,934 ) $ 514,327 $ 445,473 |
Summary of amortization expense over the estimated remaining lives of the patents and other intangible assets | Year Ending September 30, 2017 $ 143,883 2018 79,431 2019 73,268 2020 73,268 Thereafter 144,477 $ 514,327 |
Other Intangible Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of amortization expense over the estimated remaining lives of the patents and other intangible assets | September 30, 2016 December 31, 2015 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Backlog - 110,000 Less: accumulated amortization (333,243 ) (235,523 ) $ 1,506,757 $ 1,714,477 |
Summary of other intangible asset | Year Ending September 30, 2017 $ 271,000 2018 271,000 2019 271,000 2020 231,036 2021 97,000 Thereafter 365,721 $ 1,506,757 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accrued Expenses [Abstract] | |
Summary of accrued expenses | September 30, 2016 December 31, 2015 Accrued cost of revenues $ 757,146 $ 168,983 Accrued payroll and related expenses 1,089,358 380,943 Accrued professional fees 31,651 627,124 Other accrued expenses 75,350 100,846 $ 1,953,505 $ 1,277,896 |
Capital Leases (Tables)
Capital Leases (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Capital Leases [Abstract] | |
Schedule of minimum future lease payments under the capital lease | Year Ending September 30, 2017 $ 3,790 2018 3,790 2019 - 2020 - Total minimum lease payments 7,580 Less amount representing interest (556 ) Present value of net minimum lease payments $ 7,024 |
Note Payable (Tables)
Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Note Payable [Abstract] | |
Schedule of note payable | September 30, December 31, 2015 Notes Payable: Principal outstanding $ 7,441,664 $ 9,333,332 Accrued Interest 434,443 319,418 Accrued Termination Fee 235,853 160,376 8,111,960 9,813,126 Less: discount on note payable (991,673 ) (893,941 ) 7,120,287 8,919,185 Less: current portion, net (2,475,304 ) (3,984,219 ) Long-term portion, net $ 4,644,983 $ 4,934,966 |
Scheduled maturities on long term debt | Years ending September 30, Principal Discount Amortization Accrued Interest Accrued Termination Fee Total 2017 $ 3,150,000 $ (726,769 ) $ 52,073 $ - $ 2,475,304 2018 4,291,664 (264,904 ) 382,370 235,853 4,644,983 $ 7,441,664 $ (991,673 ) $ 434,443 $ 235,853 $ 7,120,287 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity [Abstract] | |
Schedule of company granted options to directors and employees | Grant Date Options Granted Exercise Price Expiration Vesting Total Value Risk Free Interest Rate Volatility February 18, 2016 30,000 $ 2.58 February 18, 2021 Immediately $ 52,560 1.15 % 103.90 % February 18, 2016 20,000 $ 2.58 February 18, 2021 Immediately $ 35,040 1.15 % 103.90 % February 18, 2016 25,000 $ 2.58 February 18, 2021 Immediately $ 43,800 1.15 % 103.90 % February 18, 2016 20,000 $ 2.58 February 18, 2021 3-years $ 35,040 1.15 % 103.90 % February 18, 2016 20,000 $ 2.58 February 18, 2021 Immediately $ 35,040 1.15 % 103.90 % February 18, 2016 25,000 $ 2.58 February 18, 2021 Immediately $ 43,800 1.15 % 103.90 % May 5, 2016 125,000 $ 2.95 May 5, 2019 3-years $ 283,500 1.26 % 91.52 % May 5, 2016 21,704 $ 2.95 May 5, 2019 3-years $ 49,225 1.26 % 91.52 % May 5, 2016 12,000 $ 2.95 May 5, 2019 3-years $ 27,216 1.26 % 91.52 % August 9, 2016 20,000 $ 4.00 August 9, 2023 Immediately $ 59,800 1.35 % 92.34 % August 9, 2016 300,000 $ 4.00 August 9, 2023 3-years $ 897,000 1.35 % 92.34 % August 9, 2016 75,000 $ 4.00 August 9, 2023 3-years $ 224,250 1.35 % 92.34 % 693,704 |
Summary of outstanding stock warrants and options | Number of Shares Weighted Average Exercise Price Outstanding – December 31, 2014 3,448,726 $ 4.90 Granted 474,281 3.60 Exercised (833,700 ) 2.50 Cancelled (496,050 ) (8.10 ) Outstanding – December 31, 2015 2,593,257 $ 4.80 Granted 693,704 1.30 Exercised (163,583 ) (4.30 ) Cancelled (1,266,510 ) (5.40 ) Outstanding – September 30, 2016 1,856,868 $ 3.10 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
Schedule of minimum future rental payments under non-cancellable operating leases | 2017 $ 276,669 2018 256,608 2019 42,768 2020 - 2021 - $ 576,045 |
Organization, History and Bus35
Organization, History and Business (Details) - shares | Sep. 30, 2016 | Dec. 31, 2015 |
Organization, History and Business (Textual) | ||
Common stock, shares authorized | 100,000,000 | 300,000,000 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Software development [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 2 years |
Software development [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 3 years |
Equipment and computer hardware [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 5 years |
Office furniture [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 7 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 5 years |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details Textual) | 1 Months Ended | 9 Months Ended | ||
Jul. 29, 2015 | Sep. 30, 2016Customers$ / shares | Sep. 30, 2015Customers | Dec. 31, 2015$ / shares | |
Summary of Significant Accounting Policies (Textual) | ||||
Company's revenue, percentage | 17.00% | 38.00% | ||
Number of customers | Customers | 5 | 6 | ||
Concentration risk description | Approximately 17% was generated from contracts with five customers covered under the Company's master services agreement with AT&T and approximately 16% was generated from contracts with an advertising agency. | Approximately 38% was generated from contracts with six customers covered under the Company's master services agreement with AT&T and approximately 6% was generated from contracts with an advertising agency. | ||
Reverse stock split | 1-for-10 reverse split. | |||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||
Accounts Receivable [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Company's revenue, percentage | 36.00% | 41.00% |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accounts Receivable, net [Abstract] | ||
Accounts receivable | $ 10,073,575 | $ 6,212,600 |
Less allowance for bad debts | (259,952) | (44,784) |
Accounts receivable, net | $ 9,813,623 | $ 6,167,816 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Property and Equipment, net [Abstract] | ||
Equipment and computer hardware | $ 673,773 | $ 727,289 |
Office furniture | 202,586 | 233,219 |
Leasehold improvements | 186,902 | 186,902 |
Equipment held under capital lease | 66,272 | 66,272 |
Property and equipment, gross | 1,129,533 | 1,213,682 |
Less: accumulated depreciation | (671,185) | (628,326) |
Property and equipment, net | $ 458,348 | $ 585,356 |
Property and Equipment, net (40
Property and Equipment, net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Property and Equipment, net (Textual) | ||||
Depreciation expense | $ 43,774 | $ 47,117 | $ 130,489 | $ 107,665 |
Capitalized Software Developm41
Capitalized Software Development Costs, net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Capitalized Software Development Costs, net [Abstract] | |||||
Beginning balance | $ 1,600,813 | ||||
Additions | 1,074,757 | $ 1,615,029 | $ 1,615,029 | ||
Less: accumulated amortization | $ 292,956 | $ 230,689 | 816,649 | 557,101 | (776,877) |
Ending balance | $ 1,858,921 | $ 1,600,813 | $ 1,858,921 | $ 1,600,813 | $ 1,600,813 |
Capitalized Software Developm42
Capitalized Software Development Costs, net (Details 1) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Capitalized Software Development Costs, net [Abstract] | |||
2,017 | $ 915,391 | ||
2,018 | 722,100 | ||
2,019 | 221,430 | ||
Capitalized Computer Software, Net | $ 1,858,921 | $ 1,600,813 | $ 1,600,813 |
Capitalized Software Developm43
Capitalized Software Development Costs, net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Capitalized Software Development Costs [Member] | ||||
Capitalized Software Development Costs, net (Textual) | ||||
Amortization expense - software development costs | $ 292,956 | $ 230,689 | $ 816,649 | $ 557,101 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Intangible Assets [Abstract] | ||
Patent costs | $ 1,577,122 | $ 1,357,407 |
Less: accumulated amortization | (1,062,795) | (911,934) |
Patents, net | $ 514,327 | $ 445,473 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
2,017 | $ 915,391 | |
2,018 | 722,100 | |
2,019 | 221,430 | |
Patents | 514,327 | $ 445,473 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2,017 | 143,883 | |
2,018 | 79,431 | |
2,019 | 73,268 | |
2,020 | 73,268 | |
Thereafter | 144,477 | |
Patents | 514,327 | |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2,017 | 271,000 | |
2,018 | 271,000 | |
2,019 | 271,000 | |
2,020 | 231,036 | |
2,021 | 97,000 | |
Thereafter | 365,721 | |
Patents | $ 1,506,757 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | $ 1,506,757 | $ 1,714,477 |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 970,000 | 970,000 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 870,000 | 870,000 |
Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 110,000 | |
Amortization [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | $ (333,243) | $ (235,523) |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Intangible Assets (Textual) | ||||
Amortization expense | $ 67,750 | $ 112,773 | $ 207,720 | $ 112,773 |
Patents [Member] | ||||
Intangible Assets (Textual) | ||||
Amortization expense | 52,744 | 49,001 | 150,863 | 133,895 |
Other Intangible Assets [Member] | ||||
Intangible Assets (Textual) | ||||
Amortization expense | $ 67,750 | $ 112,773 | $ 207,720 | $ 112,773 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accrued Expenses [Abstract] | ||
Accrued cost of revenues | $ 757,146 | $ 168,983 |
Accrued payroll and related expenses | 1,089,358 | 380,943 |
Accrued professional fees | 31,651 | 627,124 |
Other accrued expenses | 75,350 | 100,846 |
Accrued expenses | $ 1,953,505 | $ 1,277,896 |
Capital Leases (Details)
Capital Leases (Details) | Sep. 30, 2016USD ($) |
Capital Leases [Abstract] | |
2,017 | $ 3,790 |
2,018 | 3,790 |
2,019 | |
2,020 | |
Total minimum lease payments | 7,580 |
Less amount representing interest | (556) |
Present value of net minimum lease payments | $ 7,024 |
Capital Leases (Details Textual
Capital Leases (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Capital Leases (Textual) | |||||||
Equipment cost | $ 66,272 | $ 66,272 | $ 66,272 | ||||
Minimum future lease payments, Term | 4 years | ||||||
Purchase option on capital lease | 1 | $ 1 | |||||
Interest charged in capital lease | 140 | $ 276 | 515 | $ 931 | |||
Depreciation | $ 43,774 | $ 47,117 | 130,489 | 107,665 | |||
Office Equipment [Member] | |||||||
Capital Leases (Textual) | |||||||
Depreciation | $ 3,314 | $ 3,314 | $ 9,941 | $ 9,941 | |||
Office Equipment [Member] | Minimum [Member] | |||||||
Capital Leases (Textual) | |||||||
Lease expiration date | Dec. 31, 2016 | ||||||
Interest rate charged on capital leases | 2.25% | 2.25% | |||||
Office Equipment [Member] | Maximum [Member] | |||||||
Capital Leases (Textual) | |||||||
Lease expiration date | Dec. 31, 2018 | ||||||
Interest rate charged on capital leases | 7.428% | 7.428% |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Income Taxes (Textual) | |
Net operating loss carryover | $ 39,600,000 |
Operating loss carryover, expiration date | Dec. 31, 2035 |
Note Payable (Details)
Note Payable (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Notes Payable: | ||
Principal outstanding | $ 7,441,664 | $ 9,333,332 |
Accrued Interest | 434,443 | 319,418 |
Accrued Termination Fee | 235,853 | 160,376 |
Note Payable Gross | 8,111,960 | 9,813,126 |
Less: discount on note payable | (991,673) | (893,941) |
Note Payable | 7,120,287 | 8,919,185 |
Less: current portion,net | 2,475,304 | 3,984,219 |
Long-term portion, net | $ 4,644,983 | $ 4,934,966 |
Note Payable (Details 1)
Note Payable (Details 1) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Scheduled maturities on long term debt | ||
Principal | $ 7,441,664 | $ 9,333,332 |
Discount Amortization | (991,673) | |
Accrued Interest | 434,443 | 319,418 |
Accrued Termination Fee | 235,853 | 160,376 |
Note Payable | 7,120,287 | $ 8,919,185 |
2017 [Member] | ||
Scheduled maturities on long term debt | ||
Principal | 3,150,000 | |
Discount Amortization | (726,769) | |
Accrued Interest | 52,073 | |
Accrued Termination Fee | ||
Note Payable | 2,475,304 | |
2018 [Member] | ||
Scheduled maturities on long term debt | ||
Principal | 4,291,664 | |
Discount Amortization | (264,904) | |
Accrued Interest | 382,370 | |
Accrued Termination Fee | 235,853 | |
Note Payable | $ 4,644,983 |
Note Payable (Details Textual)
Note Payable (Details Textual) - USD ($) | Mar. 01, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Note Payable (Textual) | ||||||
Note payable original principal amount | $ 7,120,287 | $ 7,120,287 | $ 8,919,185 | |||
Aggregate amount of shares issued | $ 10,320,001 | |||||
Debt instrument, Term | 42 months | |||||
Interest expense | 203,681 | $ 259,857 | $ 644,405 | $ 767,245 | ||
Amortization of discount | 200,281 | 165,681 | 570,267 | 458,646 | ||
Deferred revenue | 500,000 | |||||
Interest expense from amortization | 32,934 | 50,207 | 107,823 | 138,984 | ||
Accrual of termination fees charged to interest expense | 23,054 | $ 35,145,000 | 75,476 | $ 97,289 | ||
Revenue Sharing and Note Purchase Agreement [Member] | ||||||
Note Payable (Textual) | ||||||
Issuance of commom stock shares | 200,000 | |||||
Aggregate amount of shares issued | $ 568,000 | |||||
Debt instrument, Description | Pursuant to the terms of the Amendment, principal payment on the Notes issued pursuant to the Agreement were reduced from $333,333 to $175,000 for the period commencing on the last business day of February 2016 through the last business day of February 2017 and from $333,333 to $300,000 for the period commencing on the last business day of March 2017 to the last day of business on February 2018, with the final payment on the last business day on March 2018 increased to repay the remaining principal in full. | |||||
Restructuring fee | $ 100,000 | |||||
Senior Secured Note [Member] | ||||||
Note Payable (Textual) | ||||||
Note payable original principal amount | $ 10,000,000 | $ 10,000,000 | ||||
Issuance of commom stock shares | 261,954 | |||||
Aggregate amount of shares issued | $ 1,000,000 | |||||
Stock price per share | $ 3.817 | $ 3.817 | ||||
Received paying legal and due diligence expenses | $ 8,850,000 | |||||
Description of LIBOR rate | The principal amount of the Note bears interest at a rate equal to LIBOR plus 9% per annum. Such interest is payable in cash except that 2% per annum of the interest shall be paid-in-kind, by increasing the principal amount of the Note by the amount of such interest. | |||||
Debt instrument, Term | 42 months | |||||
Amortization payments | $ 333,334 | |||||
Percentage of monetization revenues | 85.00% | |||||
Payment term monetization revenues description | The Company shall pay the Revenue Participants up to 50% of Monetization Revenues totaling (i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter (the "Revenue Stream"). The Company must also pay $350,000 to the Note Purchaser upon repayment of the Note. | |||||
Purchasers upon repayment of the notes | $ 350,000 | |||||
Interest rate | 9.00% | 9.00% | ||||
Percentage of discount | 10.00% |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | $ 375,689 | $ 336,835 | $ 935,123 | $ 634,100 |
Stock Option [Member] | ||||
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | $ 935,123 | 634,100 | ||
Stock based compensation payment of consulting services | $ 210,000 | |||
Stock based compensation payment of consulting services, Shares | 70,000 | |||
Share based compensation, number of shares vested | 700,138 | 55,945 | ||
Stock based compensation expense recognized vested | $ 386,061 | |||
General and administrative expense [Member] | ||||
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | $ 715,033 | 319,540 | ||
Sales and marketing expense [Member] | ||||
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | $ 220,090 | $ 66,521 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2016 | Sep. 30, 2016 | |
Related party transaction (Textual) | ||
Licensing agreement terms, Description | In exchange for the License, the Licensee will pay an annual fee of $1,250,000 for a minimum of three years ("Annual Fee"). Commencing three years from the Effective Date, the Licensee may each year, at its sole option, pay a $1,250,000 license fee to renew the License for every year for four additional years. Once the Licensee has paid a total of $8,750,000 in license fees, either in one lump sum or after paying $1,250,000 annually for seven years, the License is deemed to be perpetual. For Patents infringement actions provided for under the License, the Licensee will pay 20% of the gross proceeds from settlements received less any Annual Fee amounts paid and litigation costs incurred ("Share of Proceeds"). SITO Mobile R&D IP, LLC and its joint venture partner will serve as co-plaintiffs with the Licensee in infringement actions under the License and the Licensee will be responsible for any out-of-pocket costs of the JV associated with being a co-plaintiff in supporting Licensee in such litigation, including attorneys' fees. The Licensee will pay the Annual Fee and any Share of Proceeds to the JV. Proceeds received by the JV are shared by SITO Mobile R&D IP, LLC and PMC on a 30% and 70% basis, respectively. In the event that the Licensee does not assert any infringement actions under its rights in the License within five years of the Effective Date, the JV may, at its sole option, choose to terminate Licensee's exclusive right to assert infringement claims with no reduction or adjustment to the Annual Fee. | |
Deferred revenue | $ 209,016 | |
Amortization of revenue | $ 94,262 | $ 280,738 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Schedule of company granted options to directors and employees | ||
Options Granted | 693,704 | 474,281 |
Total Value | $ 365,469 | |
February 18, 2016 [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Feb. 18, 2016 | |
Options Granted | 30,000 | |
Exercise Price | $ 2.58 | |
Expiration | Feb. 18, 2021 | |
Vesting, description | Immediately | |
Total Value | $ 52,560 | |
Risk Free Interest Rate | 1.15% | |
Volatility | 103.90% | |
February 18, 2016 One [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Feb. 18, 2016 | |
Options Granted | 20,000 | |
Exercise Price | $ 2.58 | |
Expiration | Feb. 18, 2021 | |
Vesting, description | Immediately | |
Total Value | $ 35,040 | |
Risk Free Interest Rate | 1.15% | |
Volatility | 103.90% | |
February 18, 2016 Two [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Feb. 18, 2016 | |
Options Granted | 25,000 | |
Exercise Price | $ 2.58 | |
Expiration | Feb. 18, 2021 | |
Vesting, description | Immediately | |
Total Value | $ 43,800 | |
Risk Free Interest Rate | 1.15% | |
Volatility | 103.90% | |
February 18, 2016 Three [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Feb. 18, 2016 | |
Options Granted | 20,000 | |
Exercise Price | $ 2.58 | |
Expiration | Feb. 18, 2021 | |
Vesting, description | 3-years | |
Total Value | $ 35,040 | |
Risk Free Interest Rate | 1.15% | |
Volatility | 103.90% | |
February 18, 2016 Four [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Feb. 18, 2016 | |
Options Granted | 20,000 | |
Exercise Price | $ 2.58 | |
Expiration | Feb. 18, 2021 | |
Vesting, description | Immediately | |
Total Value | $ 35,040 | |
Risk Free Interest Rate | 1.15% | |
Volatility | 103.90% | |
February 18, 2016 Five [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Feb. 18, 2016 | |
Options Granted | 25,000 | |
Exercise Price | $ 2.58 | |
Expiration | Feb. 18, 2021 | |
Vesting, description | Immediately | |
Total Value | $ 43,800 | |
Risk Free Interest Rate | 1.15% | |
Volatility | 103.90% | |
May 5, 2016 [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | May 5, 2016 | |
Options Granted | 125,000 | |
Exercise Price | $ 2.95 | |
Expiration | May 5, 2019 | |
Vesting, description | 3-years | |
Total Value | $ 283,500 | |
Risk Free Interest Rate | 1.26% | |
Volatility | 91.52% | |
May 5, 2016 One [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | May 5, 2016 | |
Options Granted | 21,704 | |
Exercise Price | $ 2.95 | |
Expiration | May 5, 2019 | |
Vesting, description | 3-years | |
Total Value | $ 49,225 | |
Risk Free Interest Rate | 1.26% | |
Volatility | 91.52% | |
May 5, 2016 Two [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | May 5, 2016 | |
Options Granted | 12,000 | |
Exercise Price | $ 2.95 | |
Expiration | May 5, 2019 | |
Vesting, description | 3-years | |
Total Value | $ 27,216 | |
Risk Free Interest Rate | 1.26% | |
Volatility | 91.52% | |
August 9, 2016 [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Aug. 9, 2016 | |
Options Granted | 20,000 | |
Exercise Price | $ 4 | |
Expiration | Aug. 9, 2023 | |
Vesting, description | Immediately | |
Total Value | $ 59,800 | |
Risk Free Interest Rate | 1.35% | |
Volatility | 92.34% | |
August 9, 2016 One [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Aug. 9, 2016 | |
Options Granted | 300,000 | |
Exercise Price | $ 4 | |
Expiration | Aug. 9, 2023 | |
Vesting, description | 3-years | |
Total Value | $ 897,000 | |
Risk Free Interest Rate | 1.35% | |
Volatility | 92.34% | |
August 9, 2016 Two [Member] | ||
Schedule of company granted options to directors and employees | ||
Grant Date | Aug. 9, 2016 | |
Options Granted | 75,000 | |
Exercise Price | $ 4 | |
Expiration | Aug. 9, 2023 | |
Vesting, description | 3-years | |
Total Value | $ 224,250 | |
Risk Free Interest Rate | 1.35% | |
Volatility | 92.34% |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Summary of outstanding stock warrants and options | ||
Number of Shares, Outstanding, Beginning Balance | 2,593,257 | 3,448,726 |
Number of Shares, Granted | 693,704 | 474,281 |
Number of Shares, Exercised | (163,583) | (833,700) |
Number of Shares, Cancelled | (1,266,510) | (496,050) |
Number of Shares, Outstanding, Ending Balance | 1,856,868 | 2,593,257 |
Weighted Average Exercise Price, Outstanding, Beginning Balance | $ 4.80 | $ 4.90 |
Weighted Average Exercise Price, Granted | 1.30 | 3.60 |
Weighted Average Exercise Price, Exercised | (4.30) | 2.50 |
Weighted Average Exercise Price, Cancelled | (5.40) | (8.10) |
Weighted Average Exercise Price, Outstanding, Ending Balance | $ 3.10 | $ 4.80 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stockholders' Equity (Textual) | ||||||
Aggregate amount of common stock issued | $ 10,320,001 | |||||
Gross proceeds from common stock issued | $ 12,203,605 | $ 1,909,000 | $ 12,203,605 | $ 1,959,000 | ||
Common stock options outstanding | 1,856,868 | 1,856,868 | 2,593,257 | 3,448,726 | ||
Number of shares, Cancelled | (1,266,510) | (496,050) | ||||
Shares issued for consulting services, value | $ 210,000 | |||||
Stock options granted | 93,277 | |||||
Fortress Credit Co LLC [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of commom stock shares | 200,000 | |||||
Hipcricket, Inc. [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of commom stock shares | 620,560 | |||||
Warrant [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of commom stock shares | 833,700 | |||||
Gross proceeds from common stock issued | $ 2,109,055 | |||||
Shares issued for consulting services, value | $ 210,000 | |||||
Shares issued for payment of services, shares | 70,000 | |||||
Shares issued for warrants exercised | 729,100 | |||||
Number of warrants exercised | 684,000 | |||||
Warrants exercise price | $ 2.50 | $ 2.50 | ||||
Number of warrants exercised one | 45,100 | |||||
Warrants exercise price one | $ 3.40 | $ 3.40 | ||||
Purchase shares of Company's common stock | 729,100 | |||||
Common Stock [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of commom stock shares | 3,066,667 | 1,820,662 | ||||
Aggregate amount of common stock issued | $ 3,067 | |||||
Gross proceeds from common stock issued | $ 703,604 | |||||
Common stock options outstanding | 1,810,945 | 1,810,945 | ||||
Options vested | 700,138 | 700,138 | ||||
Number of shares, Cancelled | 70,000 | |||||
Shares issued on exercise of stock options, shares | 163,583 | |||||
Shares issued for consulting services, value | $ 70 | |||||
Shares issued for payment of services, shares | 70,000 | |||||
Common Stock [Member] | Double Vision Networks Inc. [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of commom stock shares | 296,402 | |||||
Common Stock [Member] | Fortress Credit Co LLC [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of commom stock shares | 3,430,250 | |||||
Price per share | $ 2.84 | $ 2.84 | ||||
Gross proceeds from common stock issued | $ 568,000 |
Commitments and Contingencies60
Commitments and Contingencies (Details) | Sep. 30, 2016USD ($) |
Schedule of minimum future rental payments under non-cancellable operating leases | |
2,017 | $ 276,669 |
2,018 | 256,608 |
2,019 | 42,768 |
2,020 | |
2,021 | |
Total | $ 576,045 |
Commitments and Contingencies61
Commitments and Contingencies (Details Textual) - USD ($) | Aug. 09, 2016 | May 05, 2016 | Feb. 18, 2016 | Nov. 18, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2016 |
Commitments and Contingencies (Textual) | |||||||||
Rent expense | $ 80,307 | $ 95,925 | $ 292,521 | $ 275,783 | |||||
Options issued to purchase common stock | 28,000 | ||||||||
Chief Executive Officer [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options expected to vest exercise price | $ 4 | ||||||||
Options issued to purchase common stock | 375,000 | 110,000 | |||||||
Three Employees [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options expected to vest exercise price | $ 2.95 | ||||||||
Options issued to purchase common stock | 158,704 | ||||||||
Accrued stock compensation expense | 68,698 | $ 88,695 | |||||||
Director [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options expected to vest exercise price | $ 4 | $ 2.58 | |||||||
Options issued to purchase common stock | 20,000 | 120,000 | |||||||
Accrued stock compensation expense | 0 | 210,240 | |||||||
Director One (Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Accrued stock compensation expense | $ 59,800 | $ 59,800 | |||||||
Stock Compensation Plan [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options expected to vest exercise price | $ 3.51 | $ 3.51 | |||||||
Compensation arrangement with individual description | The target bonus for the Chief Executive Officer was 50% of his base salary and for the Chief Financial Officer, the target bonus was 40% of his base salary. The cash bonus was based upon the target net revenues and gross margins of the Company. 70% of the target cash bonus was payable if Threshold Performance of 70% of the Target Performance is achieved, 100% of the target cash bonus was payable if the Target Performance is reached, with 140% of the cash bonus paid if 140% of the Target Performance is achieved. | The target bonus for the Chief Executive Officer was 50% of his base salary and for the Chief Financial Officer, the target bonus was 40% of his base salary. The cash bonus was based upon the target net revenues and gross margins of the Company. 70% of the target cash bonus was payable if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus was payable if the Target Performance is reached, with 120% of the cash bonus paid if 120% of the Target Performance is achieved. | |||||||
Options issued to purchase common stock | 50,000 | ||||||||
Accrued stock compensation expense | $ 55,098 | $ 165,294 | |||||||
Stock Compensation Plan [Member] | Chief Executive Officer [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options issued to purchase common stock | 27,500 | ||||||||
Accrued stock compensation expense | 97,624 | $ 97,624 | |||||||
Stock Compensation Plan [Member] | Chief Financial Officer [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options issued to purchase common stock | 12,500 | ||||||||
Stock Compensation Plan One [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Options expected to vest exercise price | $ 3.51 | ||||||||
Compensation arrangement with individual description | The target bonus ranges from 20-30% of their base salary. Seventy percent of the cash bonus is based upon the target net revenues and 30% of the cash bonus is based upon gross margins of the Company. 70% of the target cash bonus will be paid if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus will be paid if the Target Performance is reached, with 140% of the cash bonus paid if 140% of the Target Performance is achieved. | The target bonus ranges from 20-30% of their base salary. 70% percent of the cash bonus is based upon the target net revenues and 30% of the cash bonus is based upon gross margins of the Company. Seventy percent of the target cash bonus will be paid if threshold performance of 70% of the Target Performance is achieved, 100% of the target cash bonus will be paid if the Target Performance is reached, with 120% of the cash bonus paid if 120% of the Target Performance is achieved. | |||||||
Options issued to purchase common stock | 6,250 | ||||||||
Accrued bonus | 91,287 | $ 91,287 | |||||||
Accrued stock compensation expense | $ 25,827 | $ 77,481 | |||||||
Jersey [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Lease expiration date | Nov. 30, 2018 | ||||||||
Lease expiration period of stores provided on additional rentals | 5 years | ||||||||
Boise Office [Member] | |||||||||
Commitments and Contingencies (Textual) | |||||||||
Lease term | 38 months |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 09, 2016 | Sep. 30, 2016 |
Subsequent Events (Textual) | ||
Stock options granted | 93,277 | |
Aggregate purchase value | $ 365,469 | |
Minimum [Member] | ||
Subsequent Events (Textual) | ||
Option exercise price | $ 2.25 | |
Maximum [Member] | ||
Subsequent Events (Textual) | ||
Option exercise price | $ 4.69 | |
Subsequent Events [Member] | ||
Subsequent Events (Textual) | ||
Stock options granted | 85,296 | |
Option exercise price | $ 4.74 | |
Description of base salary | The Company's Board of Directors approved an increase in the base salary of the Company's Chief Executive Officer from $300,000 to $350,000 and an increase in the base salary of its Chief Financial Officer from $225,000 to $275,000. The Board of Directors also approved an increase in the target bonus of the Chief Executive Officer to 60% of his base salarybase salary description and an increase in the target bonus to 50% of the base salary of the Chief Financial Officer. | |
Options expiration date | Nov. 9, 2023 | |
Options expiration period | 3 years |