Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 14, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SITO MOBILE, LTD. | |
Entity Central Index Key | 1,157,817 | |
Trading Symbol | SITO | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,906,698 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 3,176,550 | $ 8,744,545 |
Accounts receivable, net | 9,980,386 | 8,842,256 |
Other prepaid expenses | 540,183 | 229,039 |
Assets from discontinued operations - net | 14,390 | 870,716 |
Total current assets | 13,711,509 | 18,686,556 |
Property and equipment, net | 500,581 | 410,688 |
Other assets | ||
Capitalized software development costs, net | 1,852,959 | 1,698,992 |
Intangible assets: | ||
Patents | 478,517 | 461,730 |
Patent applications cost | 836,785 | 854,088 |
Other intangible assets, net | 1,303,507 | 1,439,007 |
Goodwill | 6,444,225 | 6,444,225 |
Other assets including security deposits | 112,815 | 150,038 |
Total other assets | 11,028,808 | 11,048,080 |
Total assets | 25,240,898 | 30,145,324 |
Current liabilities | ||
Accounts payable | 6,109,088 | 3,184,237 |
Accrued expenses | 1,935,235 | 2,180,944 |
Deferred revenue, current portion | 408,225 | 245,407 |
Other current liabilities, including security deposit | 7,500 | |
Current obligations under capital lease | 3,576 | 3,446 |
Note payable, net - current portion | 4,399,981 | 2,896,893 |
Liabilities from discontinued operations - net | 266,011 | 607,236 |
Total current liabilities | 13,129,616 | 9,118,163 |
Long-term liabilities | ||
Obligations under capital lease | 936 | 2,756 |
Deferred revenue, noncurrent portion | 985,685 | |
Note payable, net | 3,952,827 | |
Total long-term liabilities | 986,621 | 3,955,583 |
Total liabilities | 14,116,237 | 13,073,746 |
Commitments and contingencies - See notes 16 | ||
Stockholders' Equity | ||
Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding | ||
Common stock, $.001 par value; 100,000,000 shares authorized, 20,715,564 shares issued and outstanding as of June 30, 2017 and $.001 par value; 100,000,000 shares authorized, 20,681,047 shares issued and outstanding as of December 31, 2016 | 20,715 | 20,680 |
Additional paid-in capital | 158,428,152 | 157,829,709 |
Accumulated deficit | (147,324,206) | (140,778,811) |
Total stockholders' equity | 11,124,661 | 17,071,578 |
Total liabilities and stockholders' equity | $ 25,240,898 | $ 30,145,324 |
Unaudited Condensed Consolidat3
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
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 | 100,000,000 |
Common stock, shares issued | 20,715,564 | 20,681,047 |
Common stock, shares outstanding | 20,715,564 | 20,681,047 |
Unaudited Condensed Consolidat4
Unaudited Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue | ||||
Media placement | $ 10,725,454 | $ 8,297,880 | $ 17,247,586 | $ 13,159,380 |
Licensing and royalties | 78,667 | 125,946 | 201,496 | 261,365 |
Total revenue | 10,804,121 | 8,423,826 | 17,449,082 | 13,420,745 |
Costs and Expenses | ||||
Cost of revenue | 5,626,862 | 3,770,916 | 9,021,923 | 6,214,053 |
Sales and marketing | 3,735,131 | 2,690,959 | 7,212,042 | 4,814,733 |
General and administrative | 4,087,978 | 1,204,559 | 6,418,432 | 2,880,004 |
Depreciation and amortization | 120,923 | 149,871 | 282,687 | 304,376 |
Total costs and expenses | 13,570,894 | 7,816,305 | 22,935,084 | 14,213,166 |
(Loss) income from operations | (2,766,773) | 607,521 | (5,486,002) | (792,421) |
Other Income (Expense) | ||||
Interest expense | (352,147) | (445,091) | (743,761) | (884,891) |
Net (loss) before income taxes | (3,118,920) | 162,430 | (6,229,763) | (1,677,312) |
Provision for income taxes | ||||
Net (loss) income from continuing operations | (3,118,920) | 162,430 | (6,229,763) | (1,677,312) |
Discontinued Operations | ||||
(Loss) income from operations of discontinued component | (367,008) | 562,825 | (315,632) | 1,231,871 |
Income taxes | ||||
Net (loss) income from discontinued operations | (367,008) | 562,825 | (315,632) | 1,231,871 |
Net (loss) income | $ (3,485,928) | $ 725,255 | $ (6,545,395) | $ (445,441) |
Basic net income (loss) per share | ||||
Continuing operations | $ (0.15) | $ 0.01 | $ (0.30) | $ (0.10) |
Discontinued operations | (0.02) | 0.03 | (0.02) | 0.07 |
Basic net loss per share | $ (0.17) | $ 0.04 | $ (0.32) | $ (0.03) |
Basic weighted average shares outstanding | 20,693,809 | 17,355,478 | 20,687,463 | 17,288,445 |
Diluted earnings (loss) per share | ||||
Continuing operations | $ 0.01 | |||
Discontinued operations | 0.03 | |||
Diluted net earnings (loss) per share | $ 0.04 | |||
Diluted weighted average shares outstanding | 19,831,509 |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2015 | $ 5,180,578 | $ 17,156 | $ 144,538,247 | $ (139,374,825) |
Beginning balance, Shares at Dec. 31, 2015 | 17,157,520 | |||
Shares issued on exercise of stock options | 1,069,073 | $ 257 | 1,068,816 | |
Shares issued on exercise of stock options, Shares | 256,860 | |||
Compensation recognized on option grants | 1,337,912 | 1,337,912 | ||
Issuance of stock for restructuring of debt | 568,000 | $ 200 | 567,800 | |
Issuance of stock for restructuring of debt, Shares | 200,000 | |||
Issuance of common stock | 10,320,001 | $ 3,067 | 10,316,934 | |
Issuance of common stock, Shares | 3,066,667 | |||
Net (loss) for the period | (1,403,986) | (1,403,986) | ||
Ending balance at Dec. 31, 2016 | 17,071,578 | $ 20,680 | 157,829,709 | (140,778,811) |
Ending balance, Shares at Dec. 31, 2016 | 20,681,047 | |||
Shares issued on exercise of stock options | 2,500 | $ 35 | 2,465 | |
Shares issued on exercise of stock options, Shares | 34,517 | |||
Compensation recognized on option grants | 595,978 | 595,978 | ||
Net (loss) for the period | (6,545,395) | (6,545,395) | ||
Ending balance at Jun. 30, 2017 | $ 11,124,661 | $ 20,715 | $ 158,428,152 | $ (147,324,206) |
Ending balance, Shares at Jun. 30, 2017 | 20,715,564 |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flows from Operating Activities | ||||
Net (loss) income | $ (3,485,928) | $ 725,255 | $ (6,545,395) | $ (445,441) |
Less: (loss) income from discontinued operations, net of tax | (367,008) | 562,825 | (315,632) | 1,231,871 |
Net (loss) income from continuing operations | (3,118,920) | 162,430 | (6,229,763) | (1,677,312) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Depreciation expense | 34,707 | 32,691 | 76,125 | 66,288 |
Amortization expense - software development costs | 225,611 | 152,749 | 438,093 | 286,098 |
Amortization expense - patents | 18,465 | 49,431 | 71,062 | 98,119 |
Amortization expense - discount of debt | 178,255 | 198,910 | 364,439 | 369,986 |
Amortization expense - deferred costs | 8,453 | 9,432 | 17,281 | 21,596 |
Amortization expense - intangible assets | 67,750 | 67,750 | 135,500 | 139,970 |
Provision for bad debt | 126,924 | 95,005 | 166,869 | 346,877 |
Loss on disposition of assets | 6,024 | |||
Stock based compensation | 254,228 | 184,546 | 595,487 | 556,663 |
Changes in operating assets and liabilities: | ||||
(Increase) in accounts receivable, net | (2,489,039) | (2,771,968) | (1,305,001) | (3,258,787) |
(Increase) decrease in prepaid expenses | (253,874) | 64,857 | (311,144) | 44,448 |
Decrease (increase) in other assets | (9,625) | (10,794) | 19,942 | (9,965) |
Increase in accounts payable | 3,060,001 | 1,291,847 | 2,924,852 | 1,795,664 |
(Decrease) increase in accrued expenses | (548,068) | 246,574 | (245,709) | 543,391 |
Increase in deferred revenue | 1,158,591 | 249,054 | 1,148,503 | 31,065 |
Increase in other liabilities | 7,500 | 7,500 | ||
Increase in accrued interest | 50,370 | 60,474 | 58,322 | 129,935 |
Net cash (used in) provided by operating activities - continuing operations | (1,228,671) | 82,988 | (2,061,618) | (515,964) |
Net cash (used in) provided by operating activities - discontinued operations | (159,252) | 838,884 | 237,374 | 1,931,244 |
Net cash (used in) provided by operating activities | (1,387,923) | 921,872 | (1,824,244) | 1,415,280 |
Cash Flows from Investing Activities | ||||
Patents and patent applications costs | (36,787) | (41,449) | (70,546) | (91,074) |
Purchase of property and equipment | (31,182) | (9,852) | (199,046) | (12,147) |
Proceeds from sale of property and equipment | 27,000 | |||
Capitalized software development costs | (273,280) | (252,453) | (592,060) | (538,611) |
Net cash (used in) investing activities - continuing operations | (341,249) | (303,754) | (834,652) | (641,832) |
Net cash (used in) investing activities - discontinued operations | (90,220) | (37,409) | (230,599) | |
Net cash (used in) investing activities | (341,249) | (393,974) | (872,061) | (872,431) |
Cash Flows from Financing Activities | ||||
Proceeds from issuance of common stock | 2,500 | 2,500 | ||
Restructuring of debt | (100,000) | |||
Principal reduction on obligation under capital lease | (852) | 697 | (1,690) | (81) |
Principal reduction on repayment of debt | (2,047,500) | (525,000) | (2,872,500) | (1,366,668) |
Net cash (used in) financing activities - continuing operations | (2,045,852) | (524,303) | (2,871,690) | (1,466,749) |
Net cash (used in) financing activities - discontinued operations | (4,261) | (8,500) | ||
Net cash (used in) financing activities | (2,045,852) | (528,564) | (2,871,690) | (1,475,249) |
Net (decrease) increase in cash and cash equivalents | (3,775,024) | (666) | (5,567,995) | (932,400) |
Cash and cash equivalents - beginning of period | 6,951,574 | 1,683,450 | 8,744,545 | 2,615,184 |
Cash and cash equivalents - ending of period | 3,176,550 | 1,682,784 | 3,176,550 | 1,682,784 |
Supplemental Information: | ||||
Interest expense paid | 120,527 | 115,812 | 310,890 | 297,657 |
Income taxes paid | $ 14,806 | $ 17,729 | $ 14,806 | $ 17,729 |
Organization, History and Busin
Organization, History and Business | 6 Months Ended |
Jun. 30, 2017 | |
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. 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. One June 1, 2017, the Company amended and restated its Bylaws pursuant to a written consent of the Company’s stockholders in accordance with Section 228 of the General Corporation Law of the State of Delaware. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Reclassification Certain reclassifications have been made to conform the 2016 amounts to the 2017 classifications for comparative purposes. Principles of Consolidation The accompanying consolidated financial statements include the accounts of SITO Mobile, Ltd. and its 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. Basis of Presentation 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 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 nature. 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 for the year ended December 31, 2016. 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 and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2017. 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 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 carrying value of an asset may no longer be appropriate. We assess 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. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350, requires that goodwill be tested for impairment on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including determining the fair value. Significant judgments required to estimate the fair value including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. There were no impairments recorded to goodwill for the periods presented. 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. Patent and Patent Application Costs Intangible assets include patents developed and purchased which are recorded at cost. The cost of the patents are capitalized and once issued, are amortized over their remaining useful lives. Future costs incurred for issued patents are expensed as incurred. 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 three and six months ended June 30, 2017 or for the three and six months ended June 30, 2016. 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 and Deferred Revenue 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 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. 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. 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. The licensing and royalty revenue arrangement has expired in the second quarter of 2017. Deferred revenue arises from timing differences between the delivery of services and satisfaction of all revenue recognition criteria consistent with the Company’s revenue recognition policy. Deferred revenue results from the advance payment for services to be delivered over a period of time, usually less than one-year increments. 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. 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 loss per share has not been presented since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. 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 of the Company. 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 two financial institutions. The amount on deposit in that one institution may from time to time exceed the federally-insured limit. Excluding discontinued operations, of the Company’s revenue earned during the six months ended June 30, 2017, no individual customer accounted for more than 10% of total revenue. During the six months ended June 30, 2016, approximately 29% was generated from contracts with two advertising agencies. 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 June 30, 2017, one customer accounted for 14% of the Company’s net accounts receivable balance, and as of June 30, 2016, two customers accounted for 28% of the Company’s net accounts receivable balance. 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 In July 2017, the FASB released Update 2017-11 – Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Round Down Features, In May 2017, the FASB issued Service Concession Arrangements (Topic 853) Topic 606 – Revenue from Contracts with Customers In May 2017, the FASB issued Compensation – Stock Compensation (Topic 718) In March 2017, the FASB issued Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) In March 2017, the FASB issued Compensation – Retirement Benefits (Topic 715) |
Accounts Receivable, net
Accounts Receivable, net | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable, net [Abstract] | |
Accounts Receivable, net | 3. Accounts Receivable, net Accounts receivable consist of the following: June 30, December 31, Accounts receivable $ 10,213,131 $ 9,302,208 Less allowance for bad debts (232,745 ) (459,952 ) Accounts receivable, net $ 9,980,386 $ 8,842,256 |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2017 | |
Property and Equipment, net [Abstract] | |
Property and Equipment, net | 4. Property and Equipment, net The following is a summary of property and equipment: June 30, December 31, 2016 Equipment and computer hardware $ 240,175 $ 277,292 Office furniture 258,033 198,735 Leasehold improvements 329,478 206,902 Equipment held under capital lease 13,160 13,160 840,846 696,089 Less: accumulated depreciation (340,265 ) (285,401 ) $ 500,581 $ 410,688 Depreciation expense for the three and six months ended June 30, 2017 was $34,707 and $76,125, respectively. Depreciation expense for the three and six months ended June 30, 2016 was $32,691 and $66,288, respectively. |
Capitalized Software Developmen
Capitalized Software Development Costs, net | 6 Months Ended |
Jun. 30, 2017 | |
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: June 30, December 31, Beginning balance $ 1,698,992 $ 1,117,480 Additions 592,060 1,243,506 Less: amortization expense (438,093 ) (661,994 ) Ending balance $ 1,852,959 $ 1,698,992 Amortization expense for the three and six months ended June 30, 2017 was $225,611 and $438,093, respectively. Amortization expense for the three and six months ended June 30, 2016 was $152,749 and $286,098, respectively. As of June 30, 2017, amortization expense for the remaining estimated lives for each of the next five fiscal years and thereafter of these costs is as follows: Remainder of 2017 $ 500,702 2018 803,512 2019 451,123 2020 97,622 2021 - $ 1,852,959 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Intangible Assets [Abstract] | |
Intangible Assets | 6. Intangible Assets Patents The following is a summary of capitalized patent costs: June 30, December 31, Patent costs $ 1,664,971 $ 1,577,122 Less: accumulated amortization (1,186,454 ) (1,115,392 ) $ 478,517 $ 461,730 Amortization expense for the three and six months ended June 30, 2017 was $18,465 and $71,062, respectively. Amortization expense for the three and six months ended June 30, 2016 was $49,431 and $98,119, respectively. A schedule of amortization expense over the estimated remaining lives of the patents for the next five fiscal years and thereafter is as follows: Remainder of 2017 $ 49,215 2018 89,361 2019 85,818 2020 85,818 2021 80,343 Thereafter 87,962 $ 478,517 Other Intangible Assets, net The following is a summary of other intangible asset costs: June 30, 2017 December 31, 2016 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Less: accumulated amortization (536,493 ) (400,993 ) $ 1,303,507 $ 1,439,007 Amortization expense for the three and six months ended June 30, 2017 was $67,750 and $135,500, respectively. Amortization expense for the three and six months ended June 30, 2016 was $67,750 and $139,970, respectively. A schedule of amortization expense over the estimated remaining lives of the other intangible assets for the next five fiscal years and thereafter is as follows: Remainder of 2017 $ 135,500 2018 271,000 2019 271,000 2020 187,536 2021 97,000 Thereafter 341,471 $ 1,303,507 |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Expenses [Abstract] | |
Accrued Expenses | 7. Accrued Expenses The following is a summary of accrued expenses: June 30, 2017 December 31, 2016 Accrued cost of revenues $ 182,967 $ 1,085,585 Accrued payroll and related expenses 1,477,174 879,300 Accrued professional fees 155,424 26,038 Other accrued expenses 119,670 190,021 $ 1,935,235 $ 2,180,944 |
Capital Leases
Capital Leases | 6 Months Ended |
Jun. 30, 2017 | |
Capital Leases [Abstract] | |
Capital Leases | 8. Capital Leases The Company leases office equipment under a capital lease that expires in 2018. The equipment has a cost of $13,160. Minimum future lease payments under the capital leases at June 30, 2017 for each of the next five years and in the aggregate, are as follows: Year Ending June 30, 2018 $ 3,576 2019 936 2020 - 2021 - 2022 - Total minimum lease payments 4,512 Less amount representing interest (227 ) Present value of net minimum lease payments $ 4,285 The effective interest rate charged on the capital lease is approximately 7.428% per annum. The lease provides for a $1 purchase option. Interest charged to operations for the three and six months ended June 30, 2017 was $94 and $204, respectively. Interest charged to operations for the three and six months ended June 30, 2016 was $155 and $325, respectively. Depreciation charged to operations for the three and six months ended June 30, 2017 was $658 and $1,315, respectively. Depreciation charged to operations for the three and six months ended June 30, 2016 was $658 and $1,315, respectively. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | 9. Discontinued Operations A discontinued operation is a component of the Company’s business that represents a separate major line of business that had been disposed of or is held for sale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative Consolidated Statement of Operations, Consolidated Statement of Cash Flows, and Consolidated Balance Sheets are re-presented as if the operation had been discontinued from the start of the comparative year. On February 7, 2017, the Company executed an Asset Purchase Agreement to sell the Wireless Application business for $400,000, of which $310,000 was received on the closing date and the remaining $90,000 will be paid upon the satisfaction of certain post-closing covenants. Of the $90,000 payable upon satisfaction of the post-closing covenants, $40,000 was earned and collected by the Company, with the remaining $50,000 not expected to be satisfied, for a total sale price of $350,000. The Company has reported the Wireless Application segment as Discontinued Operations in the Consolidated Statement of Operations and Consolidated Statements of Cash Flows with related assets and liabilities as of June 30, 2017 and 2016, included as Assets of business held for sale and Liabilities of business held for sale. The following table presents the assets and liabilities of the Wireless Applications business, as Assets classified as held for sale and Liabilities classified as held for sale in the Consolidated Balance Sheets: June 30, December 31, 2017 2016 Accounts receivable, net $ (2,649 ) $ 430,151 Other prepaid expenses - 9,455 Property, plant and equipment, net 11,308 35,516 Capitalized software development costs, net - 389,863 Other assets 5,731 5,731 Assets classified as held for sale 14,390 870,716 Accounts payable 98,029 298,757 Accrued expenses 108,286 248,783 Deferred revenue 59,696 59,696 Liabilities classified as held for sale $ 266,011 $ 607,236 The following table presents the Discontinued Operations of the Wireless Applications business in the Consolidated Statement of Operations: For the three months ended For the six months ended June 30, June 30, 2017 2016 2017 2016 Revenue Wireless applications revenue $ 2,950 $ 1,454,428 $ 53,298 $ 2,945,078 Costs and Expenses Cost of revenue 23,817 739,681 230,839 1,430,170 Sales and marketing 8,917 52,001 32,605 104,974 General and administrative 26,485 89,348 143,106 157,635 Depreciation and amortization 5,460 10,573 7,101 20,428 Total costs and expenses 64,679 891,603 413,651 1,713,207 Other Income (305,465 ) - 44,535 - Net income from discontinued operations $ (367,194 ) $ 562,825 $ (315,818 ) $ 1,231,871 The following table presents the Wireless Applications business in the Consolidated Statement of Cash Flows: For the three months ended For the six months ended June 30, June 30, 2017 2016 2017 2016 Net cash (used in) provided by discontinued operating activities $ (159,438 ) $ 838,884 $ 237,188 $ 1,931,244 Net cash (used in) discontinued investing activities - (90,220 ) (37,409 ) (230,599 ) Net cash (used in) discontinued financing activities - (4,621 ) - (8,500 ) Net increase in cash and cash equivalents $ (159,438 ) $ (744,043 ) $ 199,779 $ 1,692,145 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | 10. Income Taxes As of June 30, 2017, the Company has a net operating loss carryover of approximately $39,670,211 available to offset future income for income tax reporting purposes, which will expire in various years through 2036, if not previously utilized. The Company’s ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382. A limitation may apply to the use of the net operating loss and credit carryforwards, under provisions of the Internal Revenue Code that are applicable if we experience an “ownership change”. That may occur, for example, as a result of trading in our stock by significant investors as well as issuance of new equity. Should these limitations apply, the carryforwards would be subject to an annual limitation, resulting in a substantial reduction in the gross deferred tax. 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 six months ended June 30, 2017 and 2016, there were no federal income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. We are not currently involved in any income tax examinations. |
Note Payable
Note Payable | 6 Months Ended |
Jun. 30, 2017 | |
Note Payable [Abstract] | |
Note Payable | 11. Note Payable Schedule of short-term debt are as followed: June 30, December 31, 2016 Notes Payable: Principal outstanding $ 4,044,164 $ 6,916,664 Accrued interest 485,434 469,060 Accrued termination fee 300,492 258,543 4,830,090 7,644,267 Less: discount on note payable (430,109 ) (794,547 ) 4,399,981 6,849,720 Less: current portion, net (4,399,981 ) (2,896,893 ) Long-term portion, net $ - $ 3,952,827 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 “NPA”) 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 NPA, 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 NPA) 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 the 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 NPA 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 Patent License Agreement provides that the Collateral Agent may 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 NPA 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 six months ended June 30, 2017, the Company recognized $29,312 and $59,927, respectively, in licensing revenue and interest expense from amortization of the deferred revenue. For the three and six months ended June 30, 2016, the Company recognized $32,708 and $74,890, 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”) to the NPA. Pursuant to the terms of the Amendment, principal payment on the Notes issued pursuant to the NPA was 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 Purchasers. Interest expense on the Note for the three and six months ended June 30, 2017 was $150,243 and $327,007, respectively. Amortization of the discounts for the three and six months ended June 30, 2017 totaled $178,256 and $364,440, respectively, which was charged to interest expense. Accrual of termination fees for the three and six months ended June 30, 2017 was $20,518 and $41,949, respectively, which was charged to interest expense. Interest expense on the Note for the three and six months ended June 30, 2016 was $213,674 and $440,723, respectively. Amortization of the discounts for the three and six months ended June 30, 2016 totaled $198,910 and $369,986, respectively, which was charged to interest expense. Accrual of termination fees for the three and six months ended June 30, 2016 was $22,896 and $52,423, respectively, which was charged to interest expense. On August 1, 2017, the Company used approximately $4,900,000 of the proceeds of an offering common stock and warrants to prepay in full all outstanding principal, accrued and unpaid interest due through the date of repayment and termination fees payable with respect to the Note. The Company has no further obligations with respect to the Note but will remain obligated to continue to make payments with respect to the Revenue Stream according to the terms of, and will remain subject to the covenants of, the NPA. See Note 17– Subsequent Events. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Stock Based Compensation [Abstract] | |
Stock Based Compensation | 12. Stock Based Compensation During the six months ended June 30, 2017, the Company recognized stock-based compensation expense totaling $595,978, through the vesting of 345,375 common stock options. Of the $595,978 in stock compensation expense, $356,643 is included in general and administrative expense, of which $437 is included in discontinued operations, and $239,335 is included in sales and marketing expense, of which $54 is included in discontinued operations. During the six months ended June 30, 2016, the Company recognized stock-based compensation expense totaling $559,433, through the vesting of 120,000 common stock options. Of the $559,433 in stock compensation expense, $410,071 is included in general and administrative expense, of which $1,732 is included in discontinued operations, and $149,362 is included in sales and marketing expense, of which $1,040 is included in discontinued operations. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions On April 21, 2014, SITO Mobile R&D IP, LLC, the Company’s wholly-owned subsidiary, through a joint venture (the “JV”) with Personalized Media Communications, LLC (“PMC”), entered into a Joint Licensing Program Agreement (the “JV License 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 (“JV Patents”), including an exclusive license to assert the JV Patents against certain infringing parties in the media distribution industry. In exchange for the License, the Licensee has agreed to pay the JV an annual fee of $1,250,000 for a minimum of three years (“Annual Fee”), subject to a right of the Licensee to renew the License for an additional four years. Under the arrangement, if 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 would be deemed to be perpetual. For JV Patent 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 PMC have agreed serve as co-plaintiffs with the Licensee in infringement actions under the License and the Licensee has agreed to be responsible for any out-of-pocket costs of the JV associated with being a co-plaintiff in supporting the Licensee in such litigation, including attorneys’ fees. The Licensee will pay the Annual Fee and any Share of Proceeds to the JV. The Company is entitled to 30% of any proceeds received by the JV. In the event that the Licensee does not assert any infringement actions under its rights in the License prior to April 2019, 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. On May 23, 2017, the parties renewed the JV License Agreement for an additional four years in exchange for an upfront payment to the JV of $4,500,000, of which the Company received $1,350,000. The Company’s share of the renewal fee was paid to the Note Purchaser in accordance with the terms of the NPA. (See Note 11 – Note Payable.) For the three and six months ended June 30, 2017, the Company amortized $49,356 and $141,569, respectively, in revenue under the JV License Agreement and as of June 30, 2017, the Company has $1,323,185 in deferred revenue under the JV License Agreement. |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value [Abstract] | |
Fair Value | 14. 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 June 30, 2017. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the six months ended June 30, 2017. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | 15. 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 six months ended June 30, 2017, the Company issued 34,517 shares of common stock of which 1,000 shares were issued for options exercised for which the Company received $2,500 in gross proceeds, and 33,517 shares were issued in cashless exercise of 70,000 common stock options. During the six months ended June 30, 2016, the Company issued 200,000 shares of its common stock to Fortress Credit Co LLC at $2.84 per share for an aggregate amount $568,000, in consideration for the amendment of the Note Purchase Agreement. Warrants During the six months ended June 30, 2017 and 2016, no warrants were granted, exercised, or expired. Options During the six months ended June 30, 2017, the Company began expensing performance options that were granted to its employees. 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 Weighted Average Exercise Price Outstanding – December 31, 2015 2,593,257 $ 4.80 Granted 844,000 3.60 Exercised (256,860 ) (4.20 ) Cancelled (1,268,010 ) (5.40 ) Outstanding – December 31, 2016 1,912,387 $ 3.90 Granted 485,000 3.10 Exercised (34,517 ) (2.60 ) Cancelled (996,795 ) (3.80 ) Outstanding – June 30, 2017 1,366,075 $ 3.70 Of the 1,366,075 common stock options outstanding, 342,375 options are fully vested and currently available for exercise. Of the common stock options outstanding, 25,000 options will be cancelled if not exercised during the three months ended September 30, 2017. On July 28, 2017, the Company issued 1,200,000 shares of its common stock and warrants exercisable for up to approximately 300,000 shares of its common stock for gross proceeds of $6.0 million. The shares and warrants were sold in units, each consisting of one share of common stock and a warrant to purchase 0.25 of one share of common stock at an exercise price of $6.25 per share of common stock. The units were sold at an offering price of $5.00 per unit. In the offering, the Company also issued its financial advisor warrants to purchase up to an aggregate of 20,000 shares of common stock at an exercise price of $6.25 per share of common stock as partial compensation for its services in connection with the offering. See Note 17 – Subsequent Events. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies Operating Leases The Company leases office space in Jersey City, New Jersey; Meridian, Idaho; Chicago, Illinois; Dallas, Texas; New York, New York; Atlanta, Georgia; and Boston, Massachusetts. 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 other office locations are month-to-month commitments. Rent expense for the three and six months ended June 30, 2017 was $107,704 and $218,344, respectively. Rent expense for the three and six months ended June 30, 2016 was $106,352 and $212,215, respectively. Minimum future rental payments under non-cancellable operating leases with terms in excess of one year as of June 30, 2017 for the next five fiscal years and in the aggregate are: Remainder of 2017 $ 183,704 2018 333,623 2019 322,152 2020 26,846 2021 - $ 866,325 Legal In the normal course of its business, the Company may be involved in various claims, negotiations and legal actions. As of June 30, 2017, the Company is not aware of any asserted or un-asserted claims, negotiations and legal actions for which a loss is considered reasonably possible of occurring and would require recognition under guidance in ASC 450. A purported securities class action lawsuit was filed on February 17, 2017 in the United States District Court of New Jersey against the Company and our former Chief Executive Officer and Director, and our former Chief Financial Officer and Chief Operating Officer. The complaint alleges violations of various securities laws. This action was brought on behalf of a putative class of persons who purchased or otherwise acquired the Company’s common stock between February 9, 2016 and January 2, 2017 and seeks unspecified money damages. The allegations in this complaint center on allegedly materially false and/or misleading statements, misrepresenting SITO’s media placement revenues. A motion for appointment of lead plaintiff is now pending. Discovery has not commenced. Due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of this matter. The Company is unable at this time to determine whether the outcome of the litigation will have a material impact on its results of operations, financial condition or cash flows. As of June 30, 2017, the Company has recorded an accrual to defend this action which represent the amount incurred which is not covered by its insurance policy. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events Transfer of Revenue Sharing and Note Purchase Agreement On July 11, 2017, TAR SITO LendCo LLC (“TAR LendCo”), an entity owned and controlled by Julian Singer, the son of Karen Singer (sole member of TAR Holdings LLC, who owns a significant amount of the Company’s common stock), acquired from Fortress Credit Opportunities V CLO Limited, CF EZ LLC, and CF DB EZ LLC all rights, title and interest as “Purchaser” and “Revenue Participant” under the NPA and related documents. Purported Notice of Default under the NPA On July 26, 2017, the Company received a purported notice (the “Notice”) of default and acceleration of obligations under the NPA. The purported Notice alleged, without merit, that the Company had undergone a Change of Control under the terms of the NPA and had breached its obligations to provide timely information with respect to the Company’s intellectual property to the holders of notes under the NPA, in addition to other alleged minor technical and curable defaults. In fact, no Change of Control within the meaning of the NPA has occurred and the Company is in the process of providing fulsome and timely disclosure to the holders of the Note in response to a request received four business days prior to the purported notice of default. The Company believes that it has fully complied with all of the covenants under the NPA, and it believes each of the claims that an Event of Default has occurred are without merit and has provided notice of the same to the holder. Offering of Common Stock and Warrants On July 28, 2017, the Company issued 1,200,000 shares of its common stock and warrants exercisable for up to approximately 300,000 shares of its common stock for gross proceeds of $6.0 million. The shares and warrants were sold in units, each consisting of one share of common stock and a warrant to purchase 0.25 of one share of common stock at an exercise price of $6.25 per share of common stock. The units were sold at an offering price of $5.00 per unit. In the offering, the Company also issued its financial advisor warrants to purchase up to an aggregate of 20,000 shares of common stock at an exercise price of $6.25 per share of common stock as partial compensation for its services in connection with the offering. Repayment of Note under NPA On August 1, 2017, the Company used approximately $4,900,000 of the proceeds of an offering common stock and warrants to prepay in full all outstanding principal, accrued and unpaid interest due through the date of repayment and termination fees payable with respect to the Note. The Company has no further obligations with respect to the Note but will remain obligated to continue to make payments with respect to the Revenue Stream according to the terms of the NPA. Employment Agreements On July 24, 2017, the Company entered into employment agreements (the “ Employment Agreements’ Executive Mr. Pallack’s compensation as Chief Executive Officer will consist of (i) an annual base salary of $350,000, (ii) eligibility for an annual cash bonus, (iii) a grant of stock options to purchase 400,000 shares of the Company’s common stock, which will vest ratably over four years, (iv) a grant 1,028,050 restricted stock units (“ RSUs Mr. Del Priore’s compensation as Chief Financial Officer will consist of (i) an annual base salary of $225,000, (ii) eligibility for an annual cash bonus, (iii) a grant of options to purchase 100,000 shares of the Company’s common stock, which will vest ratably over four years, and (iv) a grant of 225,468 RSUs, which will vest with respect to (A) 20% of such shares in the event the average closing price of the Company’s common stock is at least $7.00 per share for 65 consecutive trading days, (B) an additional 30% of such shares in the event the average closing price of the Company’s common stock is at least $10.00 per share for 65 consecutive trading days and (C) the remaining 50% of such shares in the event the average closing price of the Company’s common stock is at least $15.00 per share for 65 consecutive trading days. Mr. Seagrave’s compensation as Chief Operating Officer will consist of (i) an annual base salary of $300,000, (ii) eligibility for an annual cash bonus, (iii) a grant of options to purchase 100,000 shares of the Company’s common stock, which will vest ratably over four years, and (iv) a grant of 225,468 RSUs, which will vest with respect to (A) 20% of such shares in the event the average closing price of the Company’s common stock is at least $7.00 per share for 65 consecutive trading days, (B) an additional 30% of such shares in the event the average closing price of the Company’s common stock is at least $10.00 per share for 65 consecutive trading days and (C) the remaining 50% of such shares in the event the average closing price of the Company’s common stock is at least $15.00 per share for 65 consecutive trading days. Options and RSU awards to the Executives may be settled in either shares of common stock or cash, at the election of the Company . 2017 Bonus Metrics. Severance Benefits ● twelve months of base salary following that termination; ● a cash bonus equal to 100% of the Executive’s base salary, which amount will be paid in the year following the termination at the time annual bonuses are paid to the Company’s senior executives; ● accelerated vesting of 100% of the Executive’s initial stock option award set forth above; ● accelerated vesting of the Executive’s initial RSU award, prorated based on the number of years served prior to termination; and ● a waiver of the applicable premium otherwise payable for COBRA continuation coverage for him (and, to the extent covered immediately prior to the date of such cessation, his eligible dependents) for a period equal to twelve months. Change of Control Benefits Each Employment Agreement also provides for customary non-competition, non-solicitation and employee no-hire covenants that apply during employment and the twelve month period thereafter and a perpetual confidentiality covenant. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Reclassification | Reclassification Certain reclassifications have been made to conform the 2016 amounts to the 2017 classifications for comparative purposes. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of SITO Mobile, Ltd. and its 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. |
Basis of Presentation | Basis of Presentation 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 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 nature. 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 for the year ended December 31, 2016. 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 and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2017. |
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 less. |
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 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 carrying value of an asset may no longer be appropriate. We assess 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. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350, requires that goodwill be tested for impairment on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including determining the fair value. Significant judgments required to estimate the fair value including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. There were no impairments recorded to goodwill for the periods presented. |
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. |
Patent and Patent Application Costs | Patent and Patent Application Costs Intangible assets include patents developed and purchased which are recorded at cost. The cost of the patents are capitalized and once issued, are amortized over their remaining useful lives. Future costs incurred for issued patents are expensed as incurred. |
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 three and six months ended June 30, 2017 or for the three and six months ended June 30, 2016. 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 and Deferred Revenue | Revenue Recognition and Deferred Revenue 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 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. 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. 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. The licensing and royalty revenue arrangement has expired in the second quarter of 2017. Deferred revenue arises from timing differences between the delivery of services and satisfaction of all revenue recognition criteria consistent with the Company’s revenue recognition policy. Deferred revenue results from the advance payment for services to be delivered over a period of time, usually less than one-year increments. |
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. |
Loss per Share | 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 loss per share has not been presented since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. 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 of the Company. 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 two financial institutions. The amount on deposit in that one institution may from time to time exceed the federally-insured limit. Excluding discontinued operations, of the Company’s revenue earned during the six months ended June 30, 2017, no individual customer accounted for more than 10% of total revenue. During the six months ended June 30, 2016, approximately 29% was generated from contracts with two advertising agencies. 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 June 30, 2017, one customer accounted for 14% of the Company’s net accounts receivable balance, and as of June 30, 2016, two customers accounted for 28% of the Company’s net accounts receivable balance. |
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 In July 2017, the FASB released Update 2017-11 – Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Round Down Features, In May 2017, the FASB issued Service Concession Arrangements (Topic 853) Topic 606 – Revenue from Contracts with Customers In May 2017, the FASB issued Compensation – Stock Compensation (Topic 718) In March 2017, the FASB issued Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) In March 2017, the FASB issued Compensation – Retirement Benefits (Topic 715) |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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) | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Receivable, net [Abstract] | |
Schedule of accounts receivable | June 30, December 31, Accounts receivable $ 10,213,131 $ 9,302,208 Less allowance for bad debts (232,745 ) (459,952 ) Accounts receivable, net $ 9,980,386 $ 8,842,256 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property and Equipment, net [Abstract] | |
Summary of property and equipment | June 30, December 31, 2016 Equipment and computer hardware $ 240,175 $ 277,292 Office furniture 258,033 198,735 Leasehold improvements 329,478 206,902 Equipment held under capital lease 13,160 13,160 840,846 696,089 Less: accumulated depreciation (340,265 ) (285,401 ) $ 500,581 $ 410,688 |
Capitalized Software Developm28
Capitalized Software Development Costs, net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Capitalized Software Development Costs, net [Abstract] | |
Summary of capitalized software development costs | June 30, December 31, Beginning balance $ 1,698,992 $ 1,117,480 Additions 592,060 1,243,506 Less: amortization expense (438,093 ) (661,994 ) Ending balance $ 1,852,959 $ 1,698,992 |
Summary of amortization expense for the estimated lives | Remainder of 2017 $ 500,702 2018 803,512 2019 451,123 2020 97,622 2021 - $ 1,852,959 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of capitalized patent costs | June 30, December 31, Patent costs $ 1,664,971 $ 1,577,122 Less: accumulated amortization (1,186,454 ) (1,115,392 ) $ 478,517 $ 461,730 |
Summary of amortization expense over the estimated remaining lives of the patents and other intangible assets | Remainder of 2017 $ 49,215 2018 89,361 2019 85,818 2020 85,818 2021 80,343 Thereafter 87,962 $ 478,517 |
Other Intangible Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of other intangible asset costs | June 30, 2017 December 31, 2016 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Less: accumulated amortization (536,493 ) (400,993 ) $ 1,303,507 $ 1,439,007 |
Summary of amortization expense over the estimated remaining lives of the patents and other intangible assets | Remainder of 2017 $ 135,500 2018 271,000 2019 271,000 2020 187,536 2021 97,000 Thereafter 341,471 $ 1,303,507 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Expenses [Abstract] | |
Summary of accrued expenses | June 30, 2017 December 31, 2016 Accrued cost of revenues $ 182,967 $ 1,085,585 Accrued payroll and related expenses 1,477,174 879,300 Accrued professional fees 155,424 26,038 Other accrued expenses 119,670 190,021 $ 1,935,235 $ 2,180,944 |
Capital Leases (Tables)
Capital Leases (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Capital Leases [Abstract] | |
Schedule of minimum future lease payments under the capital leases | Year Ending June 30, 2018 $ 3,576 2019 936 2020 - 2021 - 2022 - Total minimum lease payments 4,512 Less amount representing interest (227 ) Present value of net minimum lease payments $ 4,285 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations [Abstract] | |
Schedule of discontinued operations including balance sheets, statement of operations and statement of cash flows | June 30, December 31, 2017 2016 Accounts receivable, net $ (2,649 ) $ 430,151 Other prepaid expenses - 9,455 Property, plant and equipment, net 11,308 35,516 Capitalized software development costs, net - 389,863 Other assets 5,731 5,731 Assets classified as held for sale 14,390 870,716 Accounts payable 98,029 298,757 Accrued expenses 108,286 248,783 Deferred revenue 59,696 59,696 Liabilities classified as held for sale $ 266,011 $ 607,236 For the three months ended For the six months ended June 30, June 30, 2017 2016 2017 2016 Revenue Wireless applications revenue $ 2,950 $ 1,454,428 $ 53,298 $ 2,945,078 Costs and Expenses Cost of revenue 23,817 739,681 230,839 1,430,170 Sales and marketing 8,917 52,001 32,605 104,974 General and administrative 26,485 89,348 143,106 157,635 Depreciation and amortization 5,460 10,573 7,101 20,428 Total costs and expenses 64,679 891,603 413,651 1,713,207 Other Income (305,465 ) - 44,535 - Net income from discontinued operations $ (367,194 ) $ 562,825 $ (315,818 ) $ 1,231,871 For the three months ended For the six months ended June 30, June 30, 2017 2016 2017 2016 Net cash (used in) provided by discontinued operating activities $ (159,438 ) $ 838,884 $ 237,188 $ 1,931,244 Net cash (used in) discontinued investing activities - (90,220 ) (37,409 ) (230,599 ) Net cash (used in) discontinued financing activities - (4,621 ) - (8,500 ) Net increase in cash and cash equivalents $ (159,438 ) $ (744,043 ) $ 199,779 $ 1,692,145 |
Note Payable (Tables)
Note Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Note Payable [Abstract] | |
Schedule of note payable | June 30, December 31, 2016 Notes Payable: Principal outstanding $ 4,044,164 $ 6,916,664 Accrued interest 485,434 469,060 Accrued termination fee 300,492 258,543 4,830,090 7,644,267 Less: discount on note payable (430,109 ) (794,547 ) 4,399,981 6,849,720 Less: current portion, net (4,399,981 ) (2,896,893 ) Long-term portion, net $ - $ 3,952,827 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Summary of outstanding stock warrants and common stock options | Number of Weighted Average Exercise Price Outstanding – December 31, 2015 2,593,257 $ 4.80 Granted 844,000 3.60 Exercised (256,860 ) (4.20 ) Cancelled (1,268,010 ) (5.40 ) Outstanding – December 31, 2016 1,912,387 $ 3.90 Granted 485,000 3.10 Exercised (34,517 ) (2.60 ) Cancelled (996,795 ) (3.80 ) Outstanding – June 30, 2017 1,366,075 $ 3.70 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of minimum future rental payments under non-cancellable operating leases | Remainder of 2017 $ 183,704 2018 333,623 2019 322,152 2020 26,846 2021 - $ 866,325 |
Organization, History and Bus36
Organization, History and Business (Details) - shares | 1 Months Ended | |||
Jul. 29, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | Mar. 01, 2016 | |
Organization, History and Business (Textual) | ||||
Maximum number of authorized shares | 300,000,000 | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||
Reverse stock split | 1-for-10 reverse split |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Software development [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 3 years |
Software development [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 2 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 Accoun38
Summary of Significant Accounting Policies (Details Textual) - Customers | 1 Months Ended | 6 Months Ended | |
Jul. 29, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | |
Summary of Significant Accounting Policies (Textual) | |||
Reverse stock split | 1-for-10 reverse split | ||
Revenue [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 10.00% | 29.00% | |
Concentration risk, description | No individual customer accounted for more than 10% of total revenue. | Approximately 29% was generated from contracts with two advertising agencies. | |
Accounts receivable [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Concentration risk, percentage | 14.00% | 28.00% | |
Number of customers | 1 | 2 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts Receivable, net [Abstract] | ||
Accounts receivable | $ 10,213,131 | $ 9,302,208 |
Less allowance for bad debts | (232,745) | (459,952) |
Accounts receivable, net | $ 9,980,386 | $ 8,842,256 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property and Equipment, net [Abstract] | ||
Equipment and computer hardware | $ 240,175 | $ 277,292 |
Office furniture | 258,033 | 198,735 |
Leasehold improvements | 329,478 | 206,902 |
Equipment held under capital lease | 13,160 | 13,160 |
Property and equipment, gross | 840,846 | 696,089 |
Less: accumulated depreciation | (340,265) | (285,401) |
Property and equipment, net | $ 500,581 | $ 410,688 |
Property and Equipment, net (41
Property and Equipment, net (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property and Equipment, net (Textual) | ||||
Depreciation expense | $ 34,707 | $ 32,691 | $ 76,125 | $ 66,288 |
Capitalized Software Developm42
Capitalized Software Development Costs, net (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Capitalized Software Development Costs, net [Abstract] | |||||
Beginning balance | $ 1,698,992 | $ 1,117,480 | $ 1,117,480 | ||
Additions | 592,060 | 1,243,506 | |||
Less: amortization expense | $ (225,611) | $ (152,749) | (438,093) | $ (286,098) | (661,994) |
Ending balance | $ 1,852,959 | $ 1,852,959 | $ 1,698,992 |
Capitalized Software Developm43
Capitalized Software Development Costs, net (Details 1) | Jun. 30, 2017USD ($) |
Capitalized Software Development Costs, net [Abstract] | |
Remainder of 2017 | $ 500,702 |
2,018 | 803,512 |
2,019 | 451,123 |
2,020 | 97,622 |
2,021 | |
Amortization expense remaining estimated lives, total | $ 1,852,959 |
Capitalized Software Developm44
Capitalized Software Development Costs, net (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Capitalized Software Development Costs [Member] | ||||
Capitalized Software Development Costs, net (Textual) | ||||
Amortization expense | $ 225,611 | $ 152,749 | $ 438,093 | $ 286,098 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Intangible Assets [Abstract] | ||
Patent costs | $ 1,664,971 | $ 1,577,122 |
Less: accumulated amortization | (1,186,454) | (1,115,392) |
Patents, net | $ 478,517 | $ 461,730 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Remainder of 2017 | $ 500,702 | |
2,018 | 803,512 | |
2,019 | 451,123 | |
2,020 | 97,622 | |
2,021 | ||
Patents | 478,517 | $ 461,730 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remainder of 2017 | 49,215 | |
2,018 | 89,361 | |
2,019 | 85,818 | |
2,020 | 85,818 | |
2,021 | 80,343 | |
Thereafter | 87,962 | |
Patents | 478,517 | |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remainder of 2017 | 135,500 | |
2,018 | 271,000 | |
2,019 | 271,000 | |
2,020 | 187,536 | |
2,021 | 97,000 | |
Thereafter | 341,471 | |
Patents | $ 1,303,507 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | $ 1,303,507 | $ 1,439,007 |
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 |
Amortization [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | $ (536,493) | $ (400,993) |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Intangible Assets (Textual) | ||||
Amortization expense - patents | $ 18,465 | $ 49,431 | $ 71,062 | $ 98,119 |
Amortization expense - intangible assets | $ 67,750 | $ 67,750 | $ 135,500 | $ 139,970 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accrued Expenses [Abstract] | ||
Accrued cost of revenues | $ 182,967 | $ 1,085,585 |
Accrued payroll and related expenses | 1,477,174 | 879,300 |
Accrued professional fees | 155,424 | 26,038 |
Other accrued expenses | 119,670 | 190,021 |
Accrued expenses | $ 1,935,235 | $ 2,180,944 |
Capital Leases (Details)
Capital Leases (Details) | Jun. 30, 2017USD ($) |
Capital Leases [Abstract] | |
2,018 | $ 3,576 |
2,019 | 936 |
2,020 | |
2,021 | |
2,022 | |
Total minimum lease payments | 4,512 |
Less amount representing interest | (227) |
Present value of net minimum lease payments | $ 4,285 |
Capital Leases (Details Textual
Capital Leases (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Capital Leases (Textual) | |||||
Equipment cost | $ 13,160 | $ 13,160 | $ 13,160 | ||
Depreciation charged to operations | 34,707 | $ 32,691 | $ 76,125 | $ 66,288 | |
Office equipment [Member] | |||||
Capital Leases (Textual) | |||||
Lease expiration, date | Dec. 31, 2018 | ||||
Equipment cost | $ 13,160 | $ 13,160 | |||
Minimum future lease payments, term | 5 years | ||||
Effective interest rate charged on capital leases | 7.428% | 7.428% | |||
Purchase option on capital lease | $ 1 | $ 1 | |||
Interest charged to operations | 94 | 155 | 204 | 325 | |
Depreciation charged to operations | $ 658 | $ 658 | $ 1,315 | $ 1,315 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Discontinued Operations [Abstract] | ||
Accounts receivable, net | $ (2,649) | $ 430,151 |
Other prepaid expenses | 9,455 | |
Property, plant and equipment, net | 11,308 | 35,516 |
Capitalized software development costs, net | 389,863 | |
Other assets | 5,731 | 5,731 |
Assets classified as held for sale | 14,390 | 870,716 |
Accounts payable | 98,029 | 298,757 |
Accrued expenses | 108,286 | 248,783 |
Deferred revenue | 59,696 | 59,696 |
Liabilities classified as held for sale | $ 266,011 | $ 607,236 |
Discontinued Operations (Deta53
Discontinued Operations (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue | ||||
Wireless applications revenue | $ 2,950 | $ 1,454,428 | $ 53,298 | $ 2,945,078 |
Costs and Expenses | ||||
Cost of revenue | 23,817 | 739,681 | 230,839 | 1,430,170 |
Sales and marketing | 8,917 | 52,001 | 32,605 | 104,974 |
General and administrative | 26,485 | 89,348 | 143,106 | 157,635 |
Depreciation and amortization | 5,460 | 10,573 | 7,101 | 20,428 |
Total costs and expenses | 64,679 | 891,603 | 413,651 | 1,713,207 |
Other Income | (305,465) | 44,535 | ||
Net (loss) income from discontinued operations | $ (367,008) | $ 562,825 | $ (315,632) | $ 1,231,871 |
Discontinued Operations (Deta54
Discontinued Operations (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Discontinued Operations [Abstract] | ||||
Net cash (used in) provided by discontinued operating activities | $ (159,252) | $ 838,884 | $ 237,374 | $ 1,931,244 |
Net cash (used in) discontinued investing activities | (90,220) | (37,409) | (230,599) | |
Net cash (used in) discontinued financing activities | (4,261) | (8,500) | ||
Net increase in cash and cash equivalents | $ (159,438) | $ (744,043) | $ 199,779 | $ 1,692,145 |
Discontinued Operations (Deta55
Discontinued Operations (Details Textual) - USD ($) | Feb. 07, 2017 | Jun. 30, 2017 |
Discontinued Operations (Textual) | ||
Proceeds from sale of assets | $ 350,000 | |
Asset Purchase Agreement [Member] | ||
Discontinued Operations (Textual) | ||
Sale of business estimated price | $ 400,000 | |
Proceeds from sale of assets | $ 310,000 | |
Payments for post-closing covenants, description | The remaining $90,000 will be paid upon the satisfaction of certain post-closing covenants. Of the $90,000 payable upon satisfaction of the post-closing covenants, $40,000 was earned and collected by the Company, with the remaining $50,000 not expected to be satisfied, for a total sale price of $350,000. |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Income Taxes (Textual) | |
Operating loss carryover | $ 39,670,211 |
Operating loss carryover, expiration date | Dec. 31, 2036 |
Note Payable (Details)
Note Payable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Notes Payable: | ||
Principal outstanding | $ 4,044,164 | $ 6,916,664 |
Accrued interest | 485,434 | 469,060 |
Accrued termination fee | 300,492 | 258,543 |
Note Payable Gross | 4,830,090 | 7,644,267 |
Less: discount on note payable | (430,109) | (794,547) |
Note Payable | 4,399,981 | 6,849,720 |
Less: current portion, net | (4,399,981) | (2,896,893) |
Long-term portion, net | $ 3,952,827 |
Note Payable (Details Textual)
Note Payable (Details Textual) - USD ($) | Mar. 01, 2016 | Jul. 28, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Aug. 01, 2017 |
Note Payable (Textual) | ||||||||
Note payable original principal amount | $ 4,399,981 | $ 4,399,981 | $ 6,849,720 | |||||
Aggregate amount of shares issued | $ 10,320,001 | |||||||
Interest rate | 5.00% | 5.00% | ||||||
Debt instrument, Term | 42 months | |||||||
Investors assigned value | $ 500,000 | $ 500,000 | ||||||
Deferred revenue | 500,000 | |||||||
Interest expense from amortization | 29,312 | $ 32,708 | 59,927 | $ 74,890 | ||||
Interest expense | 150,243 | 213,674 | 327,007 | 440,723 | ||||
Amortization of discount | 178,255 | 198,910 | 364,439 | 369,986 | ||||
Accrual of termination fees charged to interest expense | 20,518 | $ 22,896 | 41,949 | $ 52,423 | ||||
Subsequent Events [Member] | ||||||||
Note Payable (Textual) | ||||||||
Issuance of commom stock shares | 1,200,000 | |||||||
Stock price per share | $ 5 | |||||||
Proceeds of offering common stock and warrants | $ 4,900,000 | |||||||
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 NPA was 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 | |||||||
Stock price per share | $ 3.817 | $ 3.817 | ||||||
Aggregate amount of shares issued | $ 1,000,000 | |||||||
Percentage of discount | 10.00% | |||||||
Received paying legal and due diligence expenses | $ 8,850,000 | |||||||
Interest rate | 9.00% | 9.00% | ||||||
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 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Stock Based Compensation [Textual] | ||||
Recognized stock-based compensation expense | $ 254,228 | $ 184,546 | $ 595,487 | $ 556,663 |
General and administrative - discontinued operations | 26,485 | 89,348 | 143,106 | 157,635 |
Sales and marketing - discontinued operations | $ 8,917 | $ 52,001 | 32,605 | 104,974 |
General and administrative expense [Member] | ||||
Stock Based Compensation [Textual] | ||||
Recognized stock-based compensation expense | 356,643 | 410,071 | ||
General and administrative - discontinued operations | 437 | 1,732 | ||
Sales and marketing expense [Member] | ||||
Stock Based Compensation [Textual] | ||||
Recognized stock-based compensation expense | 239,335 | 149,362 | ||
Sales and marketing - discontinued operations | 54 | 1,040 | ||
Stock Option [Member] | ||||
Stock Based Compensation [Textual] | ||||
Recognized stock-based compensation expense | $ 595,978 | $ 559,433 | ||
Share based compensation, number of shares vested | 345,375 | 120,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | May 23, 2017 | Apr. 21, 2014 | Jun. 30, 2017 | Jun. 30, 2017 |
Related Party Transactions (Textual) | ||||
Licensing agreement terms, Description | The parties renewed the JV License Agreement for an additional four years in exchange for an upfront payment to the JV of $4,500,000, of which the Company received $1,350,000. The Company's share of the renewal fee was paid to the Note Purchaser in accordance with the terms of the NPA. | In exchange for the License, the Licensee has agreed to pay the JV an annual fee of $1,250,000 for a minimum of three years ("Annual Fee"), subject to a right of the Licensee to renew the License for an additional four years. Under the arrangement, if 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 would be deemed to be perpetual. For JV Patent 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 PMC have agreed serve as co-plaintiffs with the Licensee in infringement actions under the License and the Licensee has agreed to be responsible for any out-of-pocket costs of the JV associated with being a co-plaintiff in supporting the Licensee in such litigation, including attorneys' fees. The Licensee will pay the Annual Fee and any Share of Proceeds to the JV. The Company is entitled to 30% of any proceeds received by the JV. In the event that the Licensee does not assert any infringement actions under its rights in the License prior to April 2019, 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. | ||
Amortization of revenue | $ 49,356 | $ 141,569 | ||
Licensing Agreement [Member] | ||||
Related Party Transactions (Textual) | ||||
Deferred revenue | $ 1,323,185 | $ 1,323,185 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Summary of outstanding stock warrants and options | ||
Number of Shares, Outstanding, Beginning Balance | 1,912,387 | 2,593,257 |
Number of Shares, Granted | 485,000 | 844,000 |
Number of Shares, Exercised | (34,517) | (256,860) |
Number of Shares, Cancelled | (996,795) | (1,268,010) |
Number of Shares, Outstanding, Ending Balance | 1,366,075 | 1,912,387 |
Weighted Average Exercise Price, Outstanding, Beginning Balance | $ 3.90 | $ 4.80 |
Weighted Average Exercise Price, Granted | 3.10 | 3.60 |
Weighted Average Exercise Price, Exercised | (2.60) | (4.20) |
Weighted Average Exercise Price, Cancelled | (3.80) | (5.40) |
Weighted Average Exercise Price, Outstanding, Ending Balance | $ 3.70 | $ 3.90 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jul. 28, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Stock [Line Items] | |||||||
Gross proceeds from common stock issued | $ 2,500 | $ 2,500 | |||||
Common stock options outstanding | 1,366,075 | 1,366,075 | 1,912,387 | 2,593,257 | |||
Subsequent Events [Member] | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock shares | 1,200,000 | ||||||
Warrants exercisable of maximum shares | 300,000 | ||||||
Description of common stock and warrants | The shares and warrants were sold in units, each consisting of one share of common stock and a warrant to purchase 0.25 of one share of common stock at an exercise price of $6.25 per share of common stock. | ||||||
Warrants to purchase common stock shares | 20,000 | ||||||
Sale of offering price per unit | $ 5 | ||||||
Warrants exercise price | $ 6.25 | ||||||
Gross proceeds from common stock issued | $ 6,000,000 | ||||||
Fortress Credit Co LLC | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock shares | 200,000 | ||||||
Stock Option [Member] | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock shares | 70,000 | ||||||
Common stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock shares | 3,066,667 | ||||||
Common stock options outstanding | 1,366,075 | 1,366,075 | |||||
Options vested | 342,375 | 342,375 | |||||
Cancelation shares of common stock options outstanding | 25,000 | ||||||
Options exercised | 34,517 | 256,860 | |||||
Common stock [Member] | Fortress Credit Co LLC | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock shares | 200,000 | ||||||
Price per share | $ 2.84 | $ 2.84 | |||||
Gross proceeds from common stock issued | $ 568,000 | ||||||
Common stock [Member] | Stock Option [Member] | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock shares | 1,000 | ||||||
Options exercised | 33,517 | ||||||
Gross proceeds from option exercised | $ 2,500 |
Commitments and Contingencies63
Commitments and Contingencies (Details) | Jun. 30, 2017USD ($) |
Schedule of minimum future rental payments under non-cancellable operating leases | |
Remainder of 2017 | $ 183,704 |
2,018 | 333,623 |
2,019 | 322,152 |
2,020 | 26,846 |
2,021 | |
Total | $ 866,325 |
Commitments and Contingencies64
Commitments and Contingencies (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Loss Contingencies [Line Items] | ||||
Rent expense | $ 107,704 | $ 106,352 | $ 218,344 | $ 212,215 |
Jersey [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lease expiration period of stores provided on additional rentals | 5 years | |||
Lease expiration, date | Nov. 30, 2018 | |||
Boise Office [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lease term | 38 months |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Aug. 01, 2017USD ($) | Jul. 28, 2017USD ($)$ / sharesshares | Jul. 24, 2017USD ($)shares | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($) | Dec. 31, 2017Metrics | Dec. 31, 2016$ / shares | |
Subsequent Events (Textual) | |||||||||
Proceeds from issuance of common stock | $ | $ 2,500 | $ 2,500 | |||||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Subsequent Events [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Issuance of common stock shares | 1,200,000 | ||||||||
Warrants exercisable of maximum shares | 300,000 | ||||||||
Proceeds from issuance of common stock | $ | $ 6,000,000 | ||||||||
Description of common stock and warrants | The shares and warrants were sold in units, each consisting of one share of common stock and a warrant to purchase 0.25 of one share of common stock at an exercise price of $6.25 per share of common stock. | ||||||||
Sale of offering price per unit | $ / shares | $ 5 | ||||||||
Warrants to purchase common stock shares | 20,000 | ||||||||
Warrants exercise price | $ / shares | $ 6.25 | ||||||||
Public offering for gross proceeds | $ | $ 4,900,000 | ||||||||
Number of metrics | Metrics | 2 | ||||||||
Executive's annual cash bonus metrics, description | If the Company's revenue for the six months ended December 31, 2017 is at least $20.0 million and the Company executes not less than two Data Deals, each Executive will be entitled to a bonus equal to 50% of his base salary. If the Company's revenue for the six months ended December 31, 2017 is at least $22.5 million and the Company executes not less than three Data Deals, each Executive will be entitled to a bonus equal to 100% of his base salary. If the Company revenue for the six months ended December 31, 2017 is at least $25.0 million and the Company executes not less than four Data Deals, each Executive will be entitled to a bonus equal to 200% of his base salary. | ||||||||
Subsequent Events [Member] | Chief Executive Officer [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Annual base salary | $ | $ 350,000 | ||||||||
Grant of stock options purchase shares of common stock | 400,000 | ||||||||
Grant of restricted stock units | 1,028,050 | ||||||||
Restricted stock units vest, description | A) 20% of such shares in the event the average closing price of the Company's common stock is at least $7.00 per share for 65 consecutive trading days, (B) an additional 30% of such shares in the event the average closing price of the Company's common stock is at least $10.00 per share for 65 consecutive trading days and (C) the remaining 50% of such shares in the event the average closing price of the Company's common stock is at least $15.00 per share for 65 consecutive trading days. | ||||||||
Subsequent Events [Member] | Chief Financial Officer [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Annual base salary | $ | $ 225,000 | ||||||||
Grant of stock options purchase shares of common stock | 100,000 | ||||||||
Grant of restricted stock units | 225,468 | ||||||||
Restricted stock units vest, description | (A) 20% of such shares in the event the average closing price of the Company's common stock is at least $7.00 per share for 65 consecutive trading days, (B) an additional 30% of such shares in the event the average closing price of the Company's common stock is at least $10.00 per share for 65 consecutive trading days and (C) the remaining 50% of such shares in the event the average closing price of the Company's common stock is at least $15.00 per share for 65 consecutive trading days. | ||||||||
Subsequent Events [Member] | Chief Operating Officer [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Annual base salary | $ | $ 300,000 | ||||||||
Grant of stock options purchase shares of common stock | 100,000 | ||||||||
Grant of restricted stock units | 225,468 | ||||||||
Restricted stock units vest, description | (A) 20% of such shares in the event the average closing price of the Company's common stock is at least $7.00 per share for 65 consecutive trading days, (B) an additional 30% of such shares in the event the average closing price of the Company's common stock is at least $10.00 per share for 65 consecutive trading days and (C) the remaining 50% of such shares in the event the average closing price of the Company's common stock is at least $15.00 per share for 65 consecutive trading days. |