Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 15, 2018 | |
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 | Sep. 30, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 25,437,536 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 4,628,333 | $ 3,611,438 |
Accounts receivable, net | 9,125,447 | 13,005,718 |
Prepaid expenses | 605,100 | 374,380 |
Assets from discontinued operations | 10,596 | |
Total current assets | 14,358,880 | 17,002,132 |
Property and equipment, net | 380,093 | 449,949 |
Other assets | ||
Capitalized software development costs, net | 971,263 | 1,485,285 |
Intangible assets: | ||
Patents, net | 637,353 | 742,574 |
Other intangible assets, net | 964,757 | 1,168,007 |
Goodwill | 6,444,225 | 6,444,225 |
Other assets | 109,003 | 92,420 |
Total other assets | 9,126,601 | 9,932,511 |
Total assets | 23,865,574 | 27,384,592 |
Current liabilities | ||
Accounts payable | 4,155,128 | 6,506,902 |
Accrued expenses | 5,794,867 | 9,911,540 |
Deferred revenue | 350,772 | |
Current obligations under capital lease | 3,556 | 2,756 |
Warrant liability | 381,820 | 1,539,388 |
Liabilities from discontinued operations | 210,789 | |
Total current liabilities | 10,686,143 | 18,171,375 |
Long-term liabilities | ||
Obligations under capital lease | 8,542 | |
Total long-term liabilities | 8,542 | |
Total liabilities | 10,694,685 | 18,171,375 |
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, 25,437,536 shares issued and outstanding as of September 30, 2018; and 22,039,529 shares issued and outstanding as of December 31, 2017 | 25,435 | 22,038 |
Additional paid-in capital | 184,952,739 | 165,008,928 |
Accumulated deficit | (171,807,285) | (155,817,749) |
Total stockholders' equity | 13,170,889 | 9,213,217 |
Total liabilities and stockholders' equity | $ 23,865,574 | $ 27,384,592 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
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 | 25,437,536 | 22,039,529 |
Common stock, shares outstanding | 25,437,536 | 22,039,529 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue | ||||
Media placement | $ 9,056,963 | $ 10,916,126 | $ 28,630,179 | $ 28,163,712 |
Licensing and royalties | 70,726 | 130,653 | ||
Total revenue | 9,056,963 | 10,986,852 | 28,630,179 | 28,294,365 |
Cost of Revenue | ||||
Cost of revenue | 4,718,727 | 5,342,189 | 15,818,757 | 14,364,112 |
Gross profit | 4,338,236 | 5,644,663 | 12,811,422 | 13,930,253 |
Operating Expenses | ||||
Sales and marketing | 4,875,669 | 3,395,943 | 15,648,741 | 10,607,985 |
General and administrative | 4,481,234 | 3,416,253 | 13,854,247 | 9,834,685 |
Depreciation and amortization | 144,803 | 713,903 | 501,096 | 996,590 |
Total operating expenses | 9,501,706 | 7,526,099 | 30,004,084 | 21,439,260 |
Loss from operations | (5,163,470) | (1,881,436) | (17,192,662) | (7,509,007) |
Other Income (Expense) | ||||
Earnings from joint venture | 1,464,754 | |||
Gain (loss) on revaluation of warrant liability | 182,048 | (636,456) | 1,157,568 | (636,456) |
Other income | 117,630 | |||
Interest income (expense), net | 2,404 | (555,288) | 8,297 | (1,299,049) |
Net loss before income taxes | (4,979,018) | (3,073,180) | (15,909,167) | (7,979,758) |
Income tax expense | (26,952) | (80,369) | ||
Loss from continuing operations | (5,005,943) | (3,073,180) | (15,989,536) | (7,979,758) |
Discontinued Operations | ||||
Income (loss) from operations of discontinued component | 2,788 | (312,844) | ||
Net income (loss) from discontinued operations | 2,788 | (312,844) | ||
Net loss | $ (5,005,943) | $ (3,070,392) | $ (15,989,536) | $ (8,292,602) |
Basic and diluted net loss per share | ||||
Continuing operations | $ (0.20) | $ (0.14) | $ (0.65) | $ (0.38) |
Discontinued operations | 0 | (0.01) | ||
Basic and diluted net loss per share | $ (0.20) | $ (0.14) | $ (0.65) | $ (0.39) |
Basic and diluted weighted average shares outstanding | 25,374,545 | 21,597,130 | 24,748,556 | 20,994,017 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2017 | $ 9,213,217 | $ 22,038 | $ 165,008,928 | $ (155,817,749) |
Beginning balance, shares at Dec. 31, 2017 | 22,039,529 | |||
Issuance of common stock, net of stock issuance costs | 13,784,501 | $ 2,990 | 13,781,511 | |
Issuance of common stock, net of stock issuance costs, shares | 2,990,000 | |||
Shares issued on exercise of restricted stock units | $ 9 | (9) | ||
Shares issued on exercise of restricted stock units, shares | 8,621 | |||
Compensation recognized on option grants | 1,137,246 | 1,137,246 | ||
Compensation recognized on restricted stock units | 952,082 | 952,082 | ||
Shares issued on exercise of stock options | 116,251 | $ 77 | 116,174 | |
Shares issued on exercise of stock options, shares | 77,420 | |||
Net loss for the period | (5,247,731) | (5,247,731) | ||
Ending balance at Mar. 31, 2018 | 19,955,566 | $ 25,114 | 180,995,932 | (161,065,480) |
Ending balance, shares at Mar. 31, 2018 | 25,115,570 | |||
Beginning balance at Dec. 31, 2017 | 9,213,217 | $ 22,038 | 165,008,928 | (155,817,749) |
Beginning balance, shares at Dec. 31, 2017 | 22,039,529 | |||
Net loss for the period | (15,989,536) | |||
Ending balance at Sep. 30, 2018 | 13,170,889 | $ 25,435 | 184,952,739 | (171,807,285) |
Ending balance, shares at Sep. 30, 2018 | 25,437,536 | |||
Beginning balance at Mar. 31, 2018 | 19,955,566 | $ 25,114 | 180,995,932 | (161,065,480) |
Beginning balance, shares at Mar. 31, 2018 | 25,115,570 | |||
Shares issued related to 2017 annual bonus for executives | 894,150 | $ 222 | 893,928 | |
Shares issued related to 2017 annual bonus for executives, shares | 222,425 | |||
Shares issued on exercise of restricted stock units | $ 4 | (4) | ||
Shares issued on exercise of restricted stock units, shares | 4,310 | |||
Compensation recognized on option grants | 1,022,908 | 1,022,908 | ||
Compensation recognized on restricted stock units | 753,064 | 753,064 | ||
Net loss for the period | (5,735,862) | (5,735,862) | ||
Ending balance at Jun. 30, 2018 | 16,889,826 | $ 25,340 | 183,665,828 | (166,801,342) |
Ending balance, shares at Jun. 30, 2018 | 25,342,305 | |||
Shares issued on exercise of restricted stock units | $ 95 | (95) | ||
Shares issued on exercise of restricted stock units, shares | 95,231 | |||
Compensation recognized on option grants | 997,729 | 997,729 | ||
Compensation recognized on restricted stock units | $ 289,277 | 289,277 | ||
Shares issued on exercise of stock options, shares | 95,231 | |||
Net loss for the period | $ (5,005,943) | (5,005,943) | ||
Ending balance at Sep. 30, 2018 | $ 13,170,889 | $ 25,435 | $ 184,952,739 | $ (171,807,285) |
Ending balance, shares at Sep. 30, 2018 | 25,437,536 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows from Operating Activities | ||
Net loss | $ (15,989,536) | $ (8,292,602) |
Less: loss from discontinued operations, net of tax | (312,844) | |
Loss from continuing operations | (15,989,536) | (7,979,758) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 122,208 | 113,516 |
Amortization expense - software development costs | 602,013 | 666,875 |
Amortization expense - patents | 175,637 | 679,823 |
Amortization expense - discount of debt | 794,548 | |
Amortization expense - deferred costs | 37,676 | |
Amortization expense - intangible assets | 203,250 | 203,250 |
Provision for bad debt | 282,072 | |
Loss on disposition of assets | 5,871 | 6,024 |
(Gain) loss on revaluation of warrant liability | (1,157,568) | 636,456 |
Stock option compensation expense | 3,157,883 | 1,261,777 |
Restricted stock compensation expense | 1,994,423 | 55,879 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable, net | 3,880,272 | (4,415,265) |
Increase in prepaid expenses | (230,720) | (1,181,585) |
(Increase) decrease in other assets | (12,938) | 19,942 |
(Decrease) increase in accounts payable | (2,496,499) | 3,077,091 |
(Decrease) increase in accrued expenses | (4,123,041) | 1,101,154 |
Increase in deferred revenue | 291,076 | 1,257,132 |
Decrease in accrued interest | (727,604) | |
Net cash used in operating activities - continuing operations | (13,577,669) | (4,110,997) |
Net cash used in operating activities - discontinued operations | (206,456) | |
Net cash used in operating activities | (13,577,669) | (4,317,453) |
Cash Flows from Investing Activities | ||
Patents and patent applications costs | (70,416) | (110,079) |
Purchase of property and equipment | (51,273) | (204,157) |
Proceeds from sale of property and equipment | 27,000 | |
Capitalized software development costs | (87,991) | (634,696) |
Net cash used in investing activities - continuing operations | (209,680) | (921,932) |
Net cash provided by investing activities - discontinued operations | 312,947 | |
Net cash used in investing activities | (209,680) | (608,985) |
Cash Flows from Financing Activities | ||
Proceeds from issuance of common stock | 14,842,750 | 6,000,000 |
Proceeds from exercise of stock options | 116,251 | 2,500 |
Stock issuance costs | (1,058,249) | (315,931) |
Shares issued related to 2017 annual bonus for executives | 894,150 | |
Principal reduction on obligation under capital lease | 9,342 | (2,559) |
Principal reduction on repayment of debt | (6,916,664) | |
Net cash provided by (used in) financing activities - continuing operations | 14,804,244 | (1,232,654) |
Net cash provided by (used in) financing activities | 14,804,244 | (1,232,654) |
Net increase (decrease) in cash and cash equivalents | 1,016,895 | (6,159,092) |
Cash and cash equivalents - beginning of period | 3,611,438 | 8,744,545 |
Cash and cash equivalents - end of period | 4,628,333 | 2,585,453 |
Supplemental Information: | ||
Interest expense paid | 1,060 | 843,662 |
Income taxes paid | $ 54,479 | $ 14,806 |
Organization, History and Busin
Organization, History and Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization, History and Business [Abstract] | |
Organization, History and Business | 1. Organization, History and Business SITO Mobile, Ltd. (the “Company”, “SITO”, “our”, “we”, and “us”) 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed and omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on April 2, 2018. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP. The condensed consolidated financial statements included 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”). All intercompany transactions and balances have been eliminated in consolidation. Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception and has an accumulated deficit of approximately $172 million at September 30, 2018. As shown in the accompanying financial statements during the three and nine months ended September 30, 2018, the Company incurred net losses of $5.3 and $16.3 million, respectively, and used $13.6 million of cash for its operating activities during the nine months ended September 30, 2018. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements. The Company’s existence is dependent upon management’s ability to obtain additional funding sources or to enter into large-scale, multi-year, significant contracts. There can be no assurance that the Company’s efforts will result in the resolution of the Company’s liquidity needs. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern. For further discussion of the Company’s ability to continue as a going concern, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I of this Quarterly Report on Form 10-Q. 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 Accounts receivable are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. An allowance for doubtful accounts 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 and about 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 increase 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 3 years Equipment and computer hardware 5 years Office furniture 5 years Leasehold improvements 5 years, or lease expiration if sooner 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 are 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. Management considered the recoverability of the carrying amount of goodwill based on certain triggering events identified as of September 30, 2018. Specifically, these triggering events considered were the Company’s ability to continue as a going concern, a sustained decrease in the Company’s stock price, and changes in management. 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 direct costs, including payroll and related payroll taxes and benefits. 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 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, estimated economic life. Patent and Patent Application Costs Intangible assets include patents successfully developed and purchased which are recorded at cost. The cost of the patents are capitalized and amortized over their useful lives. 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 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 nine months ended September 30, 2018, and 2017. The Company recognizes income tax interest and penalties as a separately identified component of general and administrative expense. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”). The legislation significantly changed the U.S. tax law, including a reduction to the corporate income tax rate from a maximum of 34% to a flat 21% rate, effective January 1, 2018. The Company has recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts due to additional analysis and changes to estimates, additional regulatory guidance that may be issued, changes in interpretations and assumptions the Company has made, and actions the Company may take because of tax reform. 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 and assets purchased from Hipcricket, Inc. Revenue Recognition and Deferred Revenue Adoption of ASC Topic 606, “Revenue from Contracts with Customers” On January 1, 2018, the Company adopted Topic 606, using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There was no adjustment to beginning accumulated deficit on January 1, 2018 due to the impact of adopting Topic 606. Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration that an entity expects to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps: 1) Identify the contract, or contracts, with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. 2) Identification of the performance obligations in the contract At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer. Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. 3) Determination of the transaction price The transaction price is the amount that an entity allocates to the performance obligations identified in the contract and, therefore, represents the amount of revenue recognized as those performance obligations are satisfied. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. 4) Allocation of the transaction price to the performance obligations in the contract Once a contract and associated performance obligations have been identified and the transaction price has been determined, ASC 606 requires an entity to allocate the transaction price to each performance obligation identified. This is generally done in proportion to the standalone selling prices of each performance obligation (i.e., on a relative standalone selling price basis). As a result, any discount within the contract generally is allocated proportionally to all of the separate performance obligations in the contract. The Company is applying the right to invoice practical expedient to recognize revenue if the Company has a right to payment from a customer in an amount that corresponds directly with the value of the Company’s performance completed to date. As a result, the entity bypasses the steps of determining the transaction price, allocating that transaction price and determining when to recognize revenue as it will recognize revenue as billed by multiplying the price assigned to the good or service, by the units. 5) Recognition of revenue when, or as, we satisfy a performance obligation Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control transfers either over time or at a point in time. Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Media placement services constitute our core revenues. Substantially all of our revenue is recognized over time, as the services are performed. Media placement revenues are recognized as the advertisement is displayed provided that collection of the resulting receivable is reasonably assured. Media placement revenues predominantly contain a single performance obligation recognized over time, using an output measure to reflect progress. For licensing and royalties, revenue is recognized on a straight-line basis over the life of the agreement based on the contractually determined fees. Revenue disaggregated by revenue source for the three and nine months ended September 30, 2018 and 2017, consist of the following: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Media placement $ 9,056,963 $ 10,916,126 $ 28,630,179 $ 28,163,712 Licensing and royalties - 70,726 - 130,653 Total revenue $ 9,056,963 $ 10,986,852 $ 28,630,179 $ 28,294,365 Media Placement The Company recognizes media placement revenue based on the activity of mobile users viewing ads through developer applications and mobile websites. Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. 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. The duration of most of the Company’s media placement services contracts is less than twelve months. Generally, there are no situations where payment by a customer occurs either significantly before or after our performance. Licensing and Royalty 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 of the minimum upfront payment for term agreement renewals. As such, when the Company has no further obligation under the agreement, the earnings process is considered complete and revenue is recognized upon the execution of the agreement; otherwise the Company recognizes revenue on a straight-line basis over the life of the agreement based on the contractually determined fees. Deferred Revenue 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. Practical Expedients and Exemptions The Company determined that an output method would be the best measure of progress in that it represents the most faithful depiction of the Company’s progress towards satisfaction of its performance obligations as such method recognizes the direct measurement of the value delivered to the customer. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. 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 option-pricing model, 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 stockholders by the weighted average number of common shares outstanding. 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 because the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. Concentrations of Credit Risk The Company primarily transacts its business with two financial institutions. The amount on deposit in both institutions may from time to time exceed the federally-insured limit. Excluding discontinued operations, of the Company’s revenue earned during the nine months ended September 30, 2018, contracts with one customer accounted for approximately 18% of total revenue. During the nine months ended September 30, 2017, no individual customer accounted for more than 10% of total revenue. The Company’s accounts receivable are typically unsecured and are derived from U.S. customers in different industries. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such losses have been within management’s expectations. As of September 30, 2018, no individual customer accounted for more than 10% of the Company’s net accounts receivable balance, and as of September 30, 2017, one customer accounted for 13% of the Company’s net accounts receivable balance. Use of Estimates The preparation of financial statements in conformity with GAAP 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 and 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 expenses in the condensed consolidated statements of operations. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements or financing activities with special purpose entities. Recent Accounting Pronouncements The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have identified the following accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management’s most difficult, subjective judgments. In May 2014, the FASB released “ ASC 606 - Revenue from Contracts with Customers” Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In April 2016, the FASB issued an Accounting Standards Update (“ASU”) “ASU 2016–10 Revenue from Contract with Customers (Topic 606): Identifying Performance Obligations and Licensing” The Company adopted the standard effective January 1, 2018, using the modified retrospective approach. There were no material changes to the Company’s condensed consolidated financial statements as a result of adopting the standard. In January 2016, the FASB issued “ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities” In February 2016, the FASB issued “ASU 2016-02 Leases” “ASU 2018-10 – Codification Improvements to Topic 842 – Leases and ASU 2018-11 – Targeted Improvements,” In November 2016, the FASB issued “ASU 2016-18 - Statement of Cash Flows (Topic 230) Restricted Cash”. In January 2017, the FASB issued “ ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment” In January 2017, the FASB issued “ASU 2017-01 - Business Combinations (Topic 805) Clarifying the Definition of a Business”. In February 2018, the FASB issued “ ASU 2018-02 - Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” In June 2018, the FASB issued “ASU 2018-07 - Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”. In July 2018, the FASB issued “ASU 2018-09 – Codification Improvements,” In August 2018, the FASB issued “ASU 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” In August 2018, the FASB issued “ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force),” Reclassification Certain reclassifications have been made to conform the 2018 amounts to the 2017 classifications for comparative purposes. The expenses presented in this Form 10-Q with respect to the three and nine months ended September 30, 2017 reflect certain reclassifications to properly record expenses for the three and nine months ended September 30, 2018. In particular, we note that expenses associated with one of our vendors, which were initially classified as general and administrative expenses, were reclassified to cost of revenue and sales and marketing expenses. For the nine months ended September 30, 2018, there were no reclassifications for comparative purposes. For the nine months ended September 30, 2017, $132,593 was reclassified from general and administrative and $52,869 from sales and marketing to cost of revenue. |
Accounts Receivable, Net
Accounts Receivable, Net | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable, Net [Abstract] | |
Accounts Receivable, net | 3. Accounts Receivable, net Accounts receivable consist of the following: September 30, December 31, 2018 2017 Accounts receivable $ 9,627,719 $ 13,546,304 Less: allowance for bad debts (502,272 ) (540,586 ) Accounts receivable, net $ 9,125,447 $ 13,005,718 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, net | 4. Property and Equipment, net The following is a summary of property and equipment: September 30, December 31, 2018 2017 Equipment and computer hardware $ 261,803 $ 250,589 Office furniture 256,820 260,121 Leasehold improvements 344,025 342,230 Equipment held under capital lease 27,594 13,160 890,241 866,100 Less: accumulated depreciation (510,149 ) (416,151 ) $ 380,093 $ 449,949 Depreciation expense for the three and nine months ended September 30, 2018 was $41,014 and $122,208, respectively, as compared to $37,391 and $113,516, respectively, for the three and nine months ended September 30, 2017. |
Capitalized Software Developmen
Capitalized Software Development Costs, Net | 9 Months Ended |
Sep. 30, 2018 | |
Capitalized Software Development Costs, Net [Abstract] | |
Capitalized Software Development Costs, net | 5. Capitalized Software Development Costs, net The following is a summary of capitalized software development costs: September 30, December 31, 2018 2017 Capitalized software development costs $ 3,100,092 $ 3,428,846 Less: accumulated amortization (2,128,829 ) (1,943,561 ) $ 971,263 $ 1,485,285 Amortization expense for the three and nine months ended September 30, 2018 was $185,769 and $602,013, respectively, as compared to $228,782 and $666,875, respectively, for the three and nine months ended September 30, 2017. As of September 30, 2018, amortization expense for the remaining estimated lives of these costs is as follows: Year Ending December 31, 2018 $ 181,210 2019 508,316 2020 204,254 2021 77,483 $ 971,263 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets [Abstract] | |
Intangible Assets | 6. Intangible Assets Patents The following is a summary of capitalized patent costs: September 30, December 31 2018 2017 Patent costs $ 2,643,356 $ 2,572,939 Less: accumulated amortization (2,006,003 ) (1,830,365 ) $ 637,353 $ 742,574 Amortization expenses for the three and nine months ended September 30, 2018 was $36,037 and $175,637, respectively, as compared to $608,761 and $679,823, respectively, for the three and nine months ended September 30, 2017. A schedule of amortization expense over the estimated remaining lives of the patents for the next five fiscal years and thereafter is as follows: Year Ending December 31, 2018 $ 36,348 2019 145,393 2020 145,393 2021 68,445 2022 61,450 Thereafter 180,324 $ 637,353 Other Intangible Assets, net The following is a summary of other intangible asset costs: September 30, December 31, 2018 2017 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Less: accumulated amortization (875,243 ) (671,993 ) $ 964,757 $ 1,168,007 Amortization expenses for the three and nine months ended September 30, 2018 was $67,750 and $203,250, respectively, as compared to $67,750 and $203,250, respectively, for the three and nine months ended September 30, 2017. 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: Year Ending December 31, 2018 $ 67,750 2019 271,000 2020 187,536 2021 97,000 2022 97,000 Thereafter 244,471 $ 964,757 Goodwill There were no changes in the carrying values of goodwill for the nine months ended September 30, 2018. DoubleVision Hipcricket, Inc. Goodwill Balance as of January 1, 2018 $ 4,549,928 $ 1,894,297 $ 6,444,225 No activity - - - Balance as of September 30, 2018 $ 4,549,928 $ 1,894,297 $ 6,444,225 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2018 | |
Accrued Expenses [Abstract] | |
Accrued Expenses | 7. Accrued Expenses The following is a summary of accrued expenses: September 30, December 31, 2018 2017 Accrued payroll and related expenses $ 4,183,895 $ 4,690,512 Accrued cost of revenues 1,204,828 940,032 Accrued professional fees 363,115 764,095 Accrued legal settlement - 3,500,000 Other accrued expenses 43,030 16,900 $ 5,794,868 $ 9,991,540 |
Capital Leases
Capital Leases | 9 Months Ended |
Sep. 30, 2018 | |
Capital Leases [Abstract] | |
Capital Leases | 8. Capital Leases The Company leases office equipment under capital leases that expire in 2018 through 2022. The equipment has a cost of $13,160 and $14,434, respectively. Minimum future lease payments under the capital lease at September 30, 2018 for each of the next five years and in the aggregate, are as follows: Year Ending September 30, 2019 $ 3,739 2020 3,739 2021 3,739 2022 1,246 2023 - Total minimum lease payments 12,463 Less amount representing interest (365 ) Present value of net minimum lease payments $ 12,098 The effective interest rate charged on the capital leases is approximately 1.750% to 7.428% per annum. The leases provide for a $1 purchase option. Interest charged to operations for the three and nine months ended September 30, 2018 was $55 and $182, respectively, as compared to $79 and $283, respectively, for the three and nine months ended September 30, 2017. Depreciation charged to operations for the three and nine months ended September 30, 2018 was $1,380 and $3,899, respectively, as compared to $658 and $1,973, respectively, for the three and nine months ended September 30, 2017. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2018 | |
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 Condensed Consolidated Statement of Operations, Condensed Consolidated Statement of Cash Flows, and Condensed 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 entered into 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 payable 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 of the post-closing covenants not satisfied and therefore uncollectible, for a total sale price of $350,000. The Company has reported the Wireless Application segment as Discontinued Operations in the Condensed Consolidated Statement of Operations and Condensed Consolidated Statements of Cash Flows with related assets and liabilities as of September 30, 2018 and 2017, included as Assets from discontinued operations and Liabilities from discontinued operations. The following table presents the assets and liabilities of the Wireless Applications business, as Assets classified from discontinued operations and Liabilities classified from discontinued operations in the Condensed Consolidated Balance Sheets: September 30, December 31, 2018 2017 Property and equipment, net $ - $ 6,951 Other assets - 3,645 Assets from discontinued operations - 10,596 Accounts payable - 144,725 Accrued expenses - 6,368 Deferred revenue - 59,696 Liabilities from discontinued operations $ - $ 210,789 The following table presents the Discontinued Operations of the Wireless Applications business in the Condensed Consolidated Statement of Operations: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenue Wireless applications $ - $ - $ - $ 53,298 Cost of Revenue Cost of revenue - 4,793 - 235,632 Gross loss - (4,793 ) - (182,334 ) Operating Expenses Sales and marketing - 410 - 32,980 General and administrative - 1,831 - 144,786 Depreciation and amortization - 2,178 - 9,279 Total operating expenses - 4,419 - 187,045 Other (Expense) Income - 12,000 - 56,535 Net loss from discontinued operations $ - $ 2,788 - $ (312,844 ) The following table presents the Wireless Applications business in the Condensed Consolidated Statement of Cash Flows: For the Nine Months Ended September 30, 2018 2017 Net cash used in discontinued operating activities $ - $ (206,456 ) Net cash provided by discontinued investing activities - 312,947 Net cash provided by discontinued financing activities - - Net increase in cash and cash equivalents $ - $ 106,491 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | 10. Income Taxes On December 22, 2017, the President of the United States signed into law the Act. The legislation significantly changed the U.S. tax law, including a reduction to the corporate income tax rate from a maximum of 34% to a flat 21% rate, effective January 1, 2018. The Company has recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The total impact to the Company’s U.S. deferred taxes and current year tax provision related to the corporate rate reduction was approximately $8.2 million. The ultimate impact may differ from these provisional amounts due to additional analysis and changes to estimates, additional regulatory guidance that may be issued, changes in interpretations and assumptions the Company has made, and actions the Company may take because of tax reform. As of September 30, 2018, the Company had a federal net operating loss carryover of approximately $60,370,288 and a state net operating loss carryover of approximately $49,323,229 available to offset future income for income tax reporting purposes, which will expire in various years through 2037, 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 nine months ended September 30, 2018 and 2017, 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 | 9 Months Ended |
Sep. 30, 2018 | |
Note Payable [Abstract] | |
Note Payable | 11. Note Payable 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,” or “Fortress”), and CF DB EZ LLC (the “Revenue Participant”) and Fortress (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 and issued, pursuant to a Subscription Agreement, 261,954 shares of common stock to Fortress for an aggregate purchase price of $1,000,000 or $3.817 per share (which represents the trailing 30-day average closing price). After deducting the original issue discount of 10% on the Note and a structuring fee to the Investors, the Company received proceeds of $8,850,000, prior to the payment of related legal and due diligence expenses. On July 11, 2017, TAR SITO LendCo LLC (“TAR”), 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. On August 1, 2017, the Company used approximately $4,900,000 of the proceeds of an offering of common stock and warrants to prepay in full all outstanding principal, accrued and unpaid interest due through the date of repayment, and termination fees of $350,000 recorded as interest expense with respect to the Note. The Company has no further obligations with respect to the Note but as of December 31, 2017, remained obligated to continue to make payment with respect to the Revenue Stream upon the terms, and subject to the conditions, of the NPA. The Revenue Stream is the right to receive a portion of Monetization Revenues (as defined in the NPA) totaling (i) if paid in full prior to March 31, 2018, up to $5,000,000 and (ii) otherwise, up to $7,500,000; provided, that upon acceleration, the Revenue Stream shall represent an absolute entitlement to receive such amounts without regard to the existence of Monetization Revenues. Prior to the repayment of the Note in full on August 1, 2017, the principal amount of the Note bore interest at a rate equal to LIBOR plus 9% per annum. Such interest was payable in cash, except that 2% per annum of such interest was to be paid-in-kind, by increasing the principal amount of the Note by the amount of such interest. The term of the Note was 42 months and the Company was required to make, beginning in October 2015, monthly amortization payments on the Note, each in a principal amount equal to $333,334 until the Note was paid in full. The Company was also required to apply 85% of Monetization Revenues from certain of the Company’s patents unrelated to its core business activities (the “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 were paid in full. After the repayment of the principal amount of the Note and all accrued interest thereunder, which occurred on August 1, 2017, the Company is obligated to pay the Investors (a) 50% of Monetization Revenues until such time as the Investors have received $2,500,000 in the aggregate with respect to the Revenue Stream, (b) 30% of the Monetization Revenues thereafter, until such time that the Investors have received $5,000,000 in the aggregate with respect to the Revenue Stream, and (c) 10% of the Monetization Revenues thereafter, until the Revenue Stream has been fully satisfied. In addition, upon any acceleration of the Note and Revenue Stream, the Company is obligated to pay the Investors 100% of the Monetization Revenues until the Revenue Stream has been fully satisfied. The Company was also required to pay $350,000 to the Note Purchaser upon repayment of the Note, which payment was also made on August 1, 2017. The NPA contained certain standard Events of Default. The Company granted to the Collateral Agent, for the benefit of the Purchaser, a non-exclusive, royalty free license (including the right to grant sublicenses) with respect to the Patents, which was evidenced by, and reflected in, a Patent License Agreement between the Company, its subsidiary Single Touch Interactive, Inc., and Fortress. 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 Collateral Agent a first priority senior security interest in all of the Company’s assets. The Company and the Collateral Agent 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 nine months ended September 30, 2018, the Company recognized $0 and $0, respectively, in licensing revenue and interest expense from amortization of the deferred revenue, as compared to $70,726 and $130,653, respectively, for the three and nine months ended September 30, 2017. 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 Note 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 in February 2018, with the final payment on the last business day in 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 Purchaser. Interest expense on the Note for the three and nine months ended September 30, 2018 was $0 and $0, respectively, as compared to $47,280 and $374,287, respectively, for the three and nine months ended September 30, 2017. Amortization of the discounts for the three and nine months ended September 30, 2018 was $0 and $0, respectively, as compared to $430,108 and $794,548, respectively, for the same periods in 2017, which was charged to interest expense. Accrual of termination fees for the three and nine months ended September 30, 2018 was $0 and $0, respectively, as compared to $49,508 and $91,457, respectively, for the same periods in 2017, which was charged to interest expense. On February 20, 2018, the Company and TAR, Mr. Julian Singer, Ms. Karen Singer and Mr. Gary Singer (collectively, the “TAR Group”), entered into a settlement agreement, pursuant to which the NPA was terminated and discharged and all pending litigation between the Company and the members of the TAR Group was dismissed with prejudice in exchange for a lump sum payment of $3.5 million from the Company to the TAR Group. No future amounts are due with respect to the NPA or the Revenue Stream and the lump sum payment has been recorded as of December 31, 2017. The settlement has been paid and no additional amounts have been recorded against the Company’s financial statements for the three and nine months ended September 30, 2018. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Stock Based Compensation [Abstract] | |
Stock Based Compensation | 12. Stock Based Compensation 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 option-pricing model, 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. During the three months ended September 30, 2018, the Company recognized stock-based compensation expense totaling $997,729, through the vesting of 283,602 common stock options in connection with employee compensation. Of the $997,729 in stock-based compensation expense, $555,959 is included in general and administrative expense, and $441,770 is included in sales and marketing expense. During the nine months ended September 30, 2018, the Company recognized stock-based compensation expense totaling $3,157,883, through the vesting of 283,602 common stock options in connection with employee compensation. Of the $3,157,883 in stock-based compensation expense, $1,696,551 is included in general and administrative expense, and $1,461,332 is included in sales and marketing expense. During the three months ended September 30, 2017, the Company recognized stock-based compensation expense totaling $666,290, through the vesting of 475,447 common stock options in connection with employee compensation. Of the $666,290 in stock-based compensation expense, $431,185 is included in general and administrative expense, and $235,105 is included in sales and marketing expense. During the nine months ended September 30, 2017, the Company recognized stock-based compensation expense totaling $1,262,268, through the vesting of 475,447 common stock options. Of the $1,262,268 in stock-based compensation expense, $787,830 is included in general and administrative expense, of which $437 is included in discontinued operations, and $474,438 is included in sales and marketing expense, of which $54 is included in discontinued operations. During the three months ended September 30, 2018, the Company recognized restricted stock-based compensation expense totaling $289,277, of which $279,776 is included in general and administrative expense and $9,501 is included in sales and marketing expense. During the three months ended September 30, 2017, the Company recognized $55,879 in restricted stock-based compensation expense, all of which is included in general and administrative expense. During the nine months ended September 30, 2018, the Company recognized restricted stock-based compensation expense totaling $1,994,423, of which $1,952,400 is included in general and administrative expense and $42,023 is included in sales and marketing expense. During the nine months ended September 30, 2017, the Company recognized $55,879 in restricted stock-based compensation expense, all of which is was included in general and administrative expense. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
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 to the JV (“Share of Proceeds”). SITO Mobile R&D IP, LLC and PMC have agreed to 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 a perpetual license in exchange for an upfront payment to the JV of $4,500,000, of which the Company received $1,350,000 and reported as earnings from the JV in 2017. 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.) As of September 30, 2018, the Company has $0 in deferred revenue under the JV License Agreement. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2018 | |
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. There have been no reclasses between Level 1, 2, or 3 inputs. The Company identified the warrants issued as part of the July 2017 offering as liabilities that are required to be presented on the condensed consolidated balance sheets at fair value within Level 2 in the fair value hierarchy because we use inputs that are observable or can be corroborated by observable data. The Company measures the fair value on a recurring basis each reporting period for these warrants and for the three and nine months ended September 30, 2018, recorded a net gain on revaluation of the warrants of $182,048 and $1,157,568, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
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 three months ended September 30, 2018, the Company issued 95,231 shares of common stock through the vesting of restricted stock units. During the nine months ended September 30, 2018, the Company issued 3,398,007 shares of common stock of which 77,420 shares were issued upon the exercise of stock options for which the Company received $116,251 in gross proceeds, 222,425 shares were issued to executive officers of the Company relating to the 2017 Annual Bonus Plan, 108,162 shares were issued through the vesting of restricted stock units, and the Company received $14,842,750 in gross proceeds, and incurred legal and accounting service fees of $1,058,249 in connection with the registration and issuance of 2,990,000 shares of common stock. During the three months ended September 30, 2017, the Company issued 1,234,896 shares of common stock of which 34,896 shares were issued for options exercised, and the Company received $5,684,069 in proceeds net of legal and accounting services in connection with the registration and issuance of 1,200,000 shares of common stock. During the nine months ended September 30, 2017, the Company issued 1,269,413 shares of common stock of which 69,413 shares were issued for options exercised for which the Company received $2,500 in gross proceeds, and the Company received $5,684,069 in proceeds net of legal and accounting services in connection with the registration and issuance of 1,200,000 shares of common stock. Warrants During the three and nine months ended September 30, 2018, no warrants were granted, exercised, or expired. The existing warrants are marked-to-market each reporting period in accordance with ASC 718. During the three and nine months ended September 30, 2017, the Company granted warrants to purchase an aggregate of 320,000 shares of its common stock, none of which have been exercised or expired. Options During the three and nine months ended September 30, 2018, the Company expensed performance options that were granted to its employees as detailed below. 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. Stock Incentive Plans The Company established the 2017 Equity Incentive Plan which supersedes the 2008, 2009, and 2010 plans (collectively, the “Plans”) under which 2,500,000 shares have been reserved for the issuance of stock options, stock appreciation rights, restricted stock, stock grants and other equity awards. The Plans are administered by the Compensation Committee of the Company’s Board of Directors (the “Board”) which determines the individuals to whom awards shall be granted as well as the type, terms, conditions, option price and the duration of each award. As of September 30, 2018, there were 861,631 shares available for grant under the 2017 Equity Incentive Plan. A stock option grant allows the holder of the option to purchase a share of the Company’s common stock in the future at a stated price. Options, restricted stock and restricted stock units granted under the Plans vest as determined by the Company’s Compensation Committee. Options granted under the Plans expire over varying terms, but not more than ten years from the date of grant. Certain restricted stock units granted to executives of the Company vest contingently dependent on the price of our common stock consistently remaining above certain thresholds for 65 consecutive trading days. These restricted stock units do not have an expiration date. Stock option activity for the nine months ended September 30, 2018 and changes during the year ended December 31, 2017 is as follows: Stock Option Activity Under the Plans Stock Options Exercise Price per Share Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance - 12/31/16 2,293,214 $2.50 - $7.06 $ 3.93 3.62 Grants 1,936,000 $2.60 - $6.66 5.49 Exercised (158,482 ) $2.50 - $6.87 (3.53 ) Cancellations (1,396,691 ) $2.50 - $7.06 (4.06 ) Balance - 12/31/17 2,293,214 $2.50 - $6.76 $ 5.20 7.93 Grants 150,000 $2.17 - $6.01 4.73 Exercised (77,420 ) $2.50 - $4.00 2.90 Cancellations (712,859 ) $2.76 - $6.66 4.70 Balance - 09/30/18 1,652,935 $2.17 - $6.76 $ 5.45 6.96 For the three and nine months ended September 30, 2018 the Company recognized compensation expense related to stock option grants of $997,729 and $3,157,883, respectively, as compared to $666,290 and $1,262,268, respectively, for the three and nine months ended September 30, 2017. The estimated fair value of each option award granted was determined on the date of grant using a Binomial Option model with the following assumptions for option grants during the nine months ended September 30, 2018 and 2017, respectively. For the Nine Months Ended 2018 2017 Weighted Average Risk-Free Interest Rate 2.97 % 2.22 % Weighted Average Expected Volatility 94.85 % 96.70 % Dividend Yield - - Weighted Average Expected Option Term (Years) 9.27 7.64 Weighted Average Grant Date Fair Value $ 4.09 $ 4.20 No dividend yield was assumed because the Company has never paid a cash dividend on its common stock and does not expect to pay dividends in the foreseeable future. Volatilities were developed using the Company’s historical volatility. The risk-free interest rate was developed using the U.S. Treasury yield for periods equal to the expected life of stock options on the grant date. The expected option term for grants made during 2018 and 2017 is based on the average expiration date of all stock options granted during the respective periods. This method of determining the expected holding period was utilized because the Company does not have sufficient historical experience from which to estimate the period. A summary of the Company’s non-vested options to purchase shares as of September 30, 2018 and changes during the year ended December 31, 2017 are presented below: Number of Options Weighted Average Exercise Non-Vested Balance - 12/31/16 1,282,026 $ 3.26 Grants 1,936,000 Vested (244,214 ) Forfeited (924,812 ) Non-Vested Balance - 12/31/17 2,049,000 $ 6.07 Grants 150,000 Vested (283,602 ) Forfeited (546,065 ) Non-Vested Balance - 09/30/18 1,369,333 $ 6.37 A summary of the Company’s restricted stock activity as of September 30, 2018 and changes during the year ended December 31, 2017 are presented below: Restricted Stock Activity Number of Shares Weighted Average Grant Date Fair Value Non-Vested Balance - 12/31/16 - $ - Grants 123,333 4.26 Vested (8,621 ) 4.35 Forfeited - - Non-Vested Balance - 12/31/17 114,713 $ 4.25 Grants 2,002,983 5.46 Vested (35,144 ) 4.27 Forfeited (278,873 ) 5.72 Non-Vested Balance - 09/30/18 1,803,679 $ 5.37 During the three months ended March 31, 2018, the Company identified an error in the accounting for certain awards granted to employees in 2017. This non-cash error of approximately $500,000 was determined to be immaterial and recorded as an out-of-period adjustment in the three months ended March 31, 2018, to primarily general and administrative expenses in the accompanying condensed consolidated statement of operations. The Company utilized the Monte Carlo valuation model to estimate the fair value of these awards which requires us to make judgments on assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of expense could be materially different in the future. For the three and nine months ended September 30, 2018, the Company recognized compensation expense related to restricted stock unit grants of $289,277 and $1,994,423, respectively, as compared to $55,879 and $55,879, respectively, for the same periods in 2017. Additional compensation expense of approximately $1,460,232 relating to the unvested portion of restricted stock granted is expected to be recognized over a remaining average period of 1.5 years. Warrants A summary of warrant activity for the nine months ended September 30, 2018 and changes during the year ended December 31, 2017 is as follows: Warrants Exercise Price per Share Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance - 12/31/16 - $ - $ - - Grants 320,000 6.25 - Exercised - - - Cancellations - - - Balance - 12/31/17 320,000 $ 6.25 $ 6.25 4.49 Grants - - - Exercised - - - Cancellations - - - Balance - 09/30/18 320,000 $ 6.25 $ 6.25 4.08 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies Operating Leases The Company leases office space in Jersey City, New Jersey; Chicago, Illinois; Dallas, Texas; New York, New York; Atlanta, Georgia; Miami, Florida; Portland, Oregon; Boston, Massachusetts; and Los Angeles and San Francisco, California. The Jersey City office lease, amended on November 6, 2014 and April 7, 2017, expires on January 31, 2020 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 nine months ended September 30, 2018 was $153,248 and $508,386, respectively, as compared to $125,061 and $343,405, respectively, for the three and nine months ended September 30, 2017. Minimum future rental payments under non-cancellable operating leases with terms in excess of one year as of September 30, 2018 for the next five fiscal years and in the aggregate are: Remainder of 2018 $ 82,326 2019 329,304 2020 27,442 2021 - 2022 - $ 439,072 Legal In the normal course of its business, the Company may be involved in various claims, negotiations and legal actions. As of September 30, 2018, the Company is not aware of any asserted or un-asserted claims, negotiations or legal actions for which a loss is considered reasonably possible of occurring and would require recognition under guidance in ASC 450 - Contingencies. Securities Class Action Lawsuit On February 17, 2017, plaintiff Sandi Roper commenced a purported securities class action against us and certain of our current and former officers and directors in the United States District Court for the District of New Jersey captioned Roper v. SITO Mobile, Ltd., Case No. 17-cv-1106-ES-MAH (D.N.J. filed Feb. 17, 2017). On May 8, 2017, Red Oak Fund, LP, Red Oak Long Fund LP, Red Oak Institutional Founders Long Fund, and Pinnacle Opportunities Fund, LP (collectively, “Red Oak”) were appointed lead plaintiffs. On June 22, 2017, Red Oak filed an amended complaint, purporting to represent a class of stockholders who purchased our common stock between August 15, 2016 and January 2, 2017 (“Class Period”). The amended complaint names as defendants our directors and certain of our officers during the Class Period. It alleges that the defendants violated section 11 of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the September 16, 2016 offering of our stock, by allegedly omitting material information from the registration statement and prospectus, and that the individual defendants are liable as controlling persons under section 15 of the Securities Act. The amended complaint also alleges that the defendants violated section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and SEC Rule 10b-5 promulgated thereunder by allegedly making materially false or misleading statements regarding its media placement revenues, and that the individual defendants are liable as controlling persons under section 20(a) of the Exchange Act. The amended complaint seeks unspecified damages. The defendants moved to dismiss the amended complaint on September 1, 2017. That motion is pending. Discovery has not commenced, and no trial date has been set for this action. TAR SITO On November 3, 2017, a complaint was filed against the Company in the Supreme Court of the State of New York by TAR. The complaint alleged that the Company breached its obligations to undertake best efforts to diligently pursue the monetization of the Patents under the NPA and to provide timely information with respect to the Company’s intellectual property to the Revenue Participant (as defined in the NPA), in addition to other alleged minor technical and curable defaults. However, the Company’s obligation to pay any amounts to TAR under the NPA is entirely dependent on the generation by the Company of revenues from the monetization of the Patents, and the Company has not generated substantial revenues from these Patents to date. Notwithstanding the complaint, the Company believes that it has diligently undertaken its best efforts to monetize the Patents (which efforts have been described in detail to TAR in writing), and that it has fully complied with all of the covenants under the NPA and is not otherwise in default under the NPA. On February 20, 2018, the Company and the TAR Group entered into a settlement agreement, pursuant to which the NPA was terminated and discharged and all pending litigation between the Company and the members of the TAR Group was dismissed with prejudice in exchange for a lump sum payment of $3.5 million from the Company to the TAR Group. No future amounts are due with respect to the NPA or the Revenue Stream and the lump sum payment has been recorded as of December 31, 2017. The settlement has been paid and no additional amounts have been recorded against the Company’s financial statements for the three and nine months ended September 30, 2018. Fort Ashford In November 2017, the Company received a complaint filed by Fort Ashford Funds, LLC (“Ashford”), in the Superior Court of the State of California, Orange County. The complaint claims that the Company issued certain warrants to Panzarella Consulting, LLC and Patrick Panzarella (collectively, “Panzarella”) giving them the option to purchase, in the aggregate, 5,000,000 shares of the Company’s common stock at a price of fifty cents ($.50) per share. Through a series of transfers, the purported warrants were allegedly transferred to Ashford, which is now seeking to exercise such purported warrants or to obtain damages. However, the Company has made a thorough inquiry into these matters, and it is unaware of the existence of any warrant or other agreement that provides that the purported warrants exist or were ever issued to Panzarella or any other person. As of this time, the complaint has failed to provide any evidence of the existence of the purported warrant, or the ability and right of Ashford to exercise such warrant. The Company has asserted a number of affirmative defenses to the claim in its answer. As the case is in the initial discovery phase, no assessment can be made at this time. The Company believes the claims are baseless and plans to defend accordingly. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events Effective October 23, 2018, Chester Petrow resigned as Chief Revenue Officer of the Company. Mr. Petrow is seeking severance compensation, pursuant to his employment agreement, following his resignation with the Company. The Company is actively engaged in discussions with counsel for Mr. Petrow regarding these matters; however, currently no amount can be reasonably estimated regarding the outcome of these discussions. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed and omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on April 2, 2018. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP. The condensed consolidated financial statements included 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”). All intercompany transactions and balances have been eliminated in consolidation. |
Going Concern | Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception and has an accumulated deficit of approximately $172 million at September 30, 2018. As shown in the accompanying financial statements during the three and nine months ended September 30, 2018, the Company incurred net losses of $5.3 and $16.3 million, respectively, and used $13.6 million of cash for its operating activities during the nine months ended September 30, 2018. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements. The Company’s existence is dependent upon management’s ability to obtain additional funding sources or to enter into large-scale, multi-year, significant contracts. There can be no assurance that the Company’s efforts will result in the resolution of the Company’s liquidity needs. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern. For further discussion of the Company’s ability to continue as a going concern, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of Part I of this Quarterly Report on Form 10-Q. |
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 | Accounts Receivable Accounts receivable are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. An allowance for doubtful accounts 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 and about 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 increase 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 3 years Equipment and computer hardware 5 years Office furniture 5 years Leasehold improvements 5 years, or lease expiration if sooner |
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 are 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. Management considered the recoverability of the carrying amount of goodwill based on certain triggering events identified as of September 30, 2018. Specifically, these triggering events considered were the Company’s ability to continue as a going concern, a sustained decrease in the Company’s stock price, and changes in management. 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 direct costs, including payroll and related payroll taxes and benefits. 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 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, estimated economic life. |
Patent and Patent Application Costs | Patent and Patent Application Costs Intangible assets include patents successfully developed and purchased which are recorded at cost. The cost of the patents are capitalized and amortized over their useful lives. |
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 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 nine months ended September 30, 2018, and 2017. The Company recognizes income tax interest and penalties as a separately identified component of general and administrative expense. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”). The legislation significantly changed the U.S. tax law, including a reduction to the corporate income tax rate from a maximum of 34% to a flat 21% rate, effective January 1, 2018. The Company has recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts due to additional analysis and changes to estimates, additional regulatory guidance that may be issued, changes in interpretations and assumptions the Company has made, and actions the Company may take because of tax reform. |
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 and assets purchased from Hipcricket, Inc. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue Adoption of ASC Topic 606, “Revenue from Contracts with Customers” On January 1, 2018, the Company adopted Topic 606, using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 605. There was no adjustment to beginning accumulated deficit on January 1, 2018 due to the impact of adopting Topic 606. Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration that an entity expects to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps: 1) Identify the contract, or contracts, with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. 2) Identification of the performance obligations in the contract At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer. Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. 3) Determination of the transaction price The transaction price is the amount that an entity allocates to the performance obligations identified in the contract and, therefore, represents the amount of revenue recognized as those performance obligations are satisfied. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. 4) Allocation of the transaction price to the performance obligations in the contract Once a contract and associated performance obligations have been identified and the transaction price has been determined, ASC 606 requires an entity to allocate the transaction price to each performance obligation identified. This is generally done in proportion to the standalone selling prices of each performance obligation (i.e., on a relative standalone selling price basis). As a result, any discount within the contract generally is allocated proportionally to all of the separate performance obligations in the contract. The Company is applying the right to invoice practical expedient to recognize revenue if the Company has a right to payment from a customer in an amount that corresponds directly with the value of the Company’s performance completed to date. As a result, the entity bypasses the steps of determining the transaction price, allocating that transaction price and determining when to recognize revenue as it will recognize revenue as billed by multiplying the price assigned to the good or service, by the units. 5) Recognition of revenue when, or as, we satisfy a performance obligation Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control transfers either over time or at a point in time. Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Media placement services constitute our core revenues. Substantially all of our revenue is recognized over time, as the services are performed. Media placement revenues are recognized as the advertisement is displayed provided that collection of the resulting receivable is reasonably assured. Media placement revenues predominantly contain a single performance obligation recognized over time, using an output measure to reflect progress. For licensing and royalties, revenue is recognized on a straight-line basis over the life of the agreement based on the contractually determined fees. Revenue disaggregated by revenue source for the three and nine months ended September 30, 2018 and 2017, consist of the following: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Media placement $ 9,056,963 $ 10,916,126 $ 28,630,179 $ 28,163,712 Licensing and royalties - 70,726 - 130,653 Total revenue $ 9,056,963 $ 10,986,852 $ 28,630,179 $ 28,294,365 Media Placement The Company recognizes media placement revenue based on the activity of mobile users viewing ads through developer applications and mobile websites. Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. 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. The duration of most of the Company’s media placement services contracts is less than twelve months. Generally, there are no situations where payment by a customer occurs either significantly before or after our performance. Licensing and Royalty 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 of the minimum upfront payment for term agreement renewals. As such, when the Company has no further obligation under the agreement, the earnings process is considered complete and revenue is recognized upon the execution of the agreement; otherwise the Company recognizes revenue on a straight-line basis over the life of the agreement based on the contractually determined fees. Deferred Revenue 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. Practical Expedients and Exemptions The Company determined that an output method would be the best measure of progress in that it represents the most faithful depiction of the Company’s progress towards satisfaction of its performance obligations as such method recognizes the direct measurement of the value delivered to the customer. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. |
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 option-pricing model, 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 stockholders by the weighted average number of common shares outstanding. 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 because the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company primarily transacts its business with two financial institutions. The amount on deposit in both institutions may from time to time exceed the federally-insured limit. Excluding discontinued operations, of the Company’s revenue earned during the nine months ended September 30, 2018, contracts with one customer accounted for approximately 18% of total revenue. During the nine months ended September 30, 2017, no individual customer accounted for more than 10% of total revenue. The Company’s accounts receivable are typically unsecured and are derived from U.S. customers in different industries. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such losses have been within management’s expectations. As of September 30, 2018, no individual customer accounted for more than 10% of the Company’s net accounts receivable balance, and as of September 30, 2017, one customer accounted for 13% of the Company’s net accounts receivable balance. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP 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 and 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 expenses in the condensed consolidated statements of operations. |
Off-Balance Sheet Arrangements | Off-Balance Sheet Arrangements We have no off-balance sheet arrangements or financing activities with special purpose entities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have identified the following accounting policies that we believe are key to an understanding of our financial statements. These are important accounting policies that require management’s most difficult, subjective judgments. In May 2014, the FASB released “ ASC 606 - Revenue from Contracts with Customers” Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In April 2016, the FASB issued an Accounting Standards Update (“ASU”) “ASU 2016–10 Revenue from Contract with Customers (Topic 606): Identifying Performance Obligations and Licensing” The Company adopted the standard effective January 1, 2018, using the modified retrospective approach. There were no material changes to the Company’s condensed consolidated financial statements as a result of adopting the standard. In January 2016, the FASB issued “ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities” In February 2016, the FASB issued “ASU 2016-02 Leases” “ASU 2018-10 – Codification Improvements to Topic 842 – Leases and ASU 2018-11 – Targeted Improvements,” In November 2016, the FASB issued “ASU 2016-18 - Statement of Cash Flows (Topic 230) Restricted Cash”. In January 2017, the FASB issued “ ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment” In January 2017, the FASB issued “ASU 2017-01 - Business Combinations (Topic 805) Clarifying the Definition of a Business”. In February 2018, the FASB issued “ ASU 2018-02 - Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” In June 2018, the FASB issued “ASU 2018-07 - Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”. In July 2018, the FASB issued “ASU 2018-09 – Codification Improvements,” In August 2018, the FASB issued “ASU 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” In August 2018, the FASB issued “ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force),” |
Reclassification | Reclassification Certain reclassifications have been made to conform the 2018 amounts to the 2017 classifications for comparative purposes. The expenses presented in this Form 10-Q with respect to the three and nine months ended September 30, 2017 reflect certain reclassifications to properly record expenses for the three and nine months ended September 30, 2018. In particular, we note that expenses associated with one of our vendors, which were initially classified as general and administrative expenses, were reclassified to cost of revenue and sales and marketing expenses. For the nine months ended September 30, 2018, there were no reclassifications for comparative purposes. For the nine months ended September 30, 2017, $132,593 was reclassified from general and administrative and $52,869 from sales and marketing to cost of revenue. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of property and equipment, net estimated useful lives | Software development 3 years Equipment and computer hardware 5 years Office furniture 5 years Leasehold improvements 5 years, or lease expiration if sooner |
Schedule of revenue disaggregated by revenue source | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Media placement $ 9,056,963 $ 10,916,126 $ 28,630,179 $ 28,163,712 Licensing and royalties - 70,726 - 130,653 Total revenue $ 9,056,963 $ 10,986,852 $ 28,630,179 $ 28,294,365 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable | September 30, December 31, 2018 2017 Accounts receivable $ 9,627,719 $ 13,546,304 Less: allowance for bad debts (502,272 ) (540,586 ) Accounts receivable, net $ 9,125,447 $ 13,005,718 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment | September 30, December 31, 2018 2017 Equipment and computer hardware $ 261,803 $ 250,589 Office furniture 256,820 260,121 Leasehold improvements 344,025 342,230 Equipment held under capital lease 27,594 13,160 890,241 866,100 Less: accumulated depreciation (510,149 ) (416,151 ) $ 380,093 $ 449,949 |
Capitalized Software Developm_2
Capitalized Software Development Costs, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Capitalized Software Development Costs, Net [Abstract] | |
Summary of capitalized software development costs | September 30, December 31, 2018 2017 Capitalized software development costs $ 3,100,092 $ 3,428,846 Less: accumulated amortization (2,128,829 ) (1,943,561 ) $ 971,263 $ 1,485,285 |
Summary of amortization expense for the estimated lives | Year Ending December 31, 2018 $ 181,210 2019 508,316 2020 204,254 2021 77,483 $ 971,263 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of capitalized patent costs | September 30, December 31 2018 2017 Patent costs $ 2,643,356 $ 2,572,939 Less: accumulated amortization (2,006,003 ) (1,830,365 ) $ 637,353 $ 742,574 |
Summary of amortization expense over the estimated remaining lives of the patents and other intangible assets | Year Ending December 31, 2018 $ 36,348 2019 145,393 2020 145,393 2021 68,445 2022 61,450 Thereafter 180,324 $ 637,353 |
Schedule of carrying values of goodwill | DoubleVision Hipcricket, Inc. Goodwill Balance as of January 1, 2018 $ 4,549,928 $ 1,894,297 $ 6,444,225 No activity - - - Balance as of September 30, 2018 $ 4,549,928 $ 1,894,297 $ 6,444,225 |
Other Intangible Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of other intangible asset costs | September 30, December 31, 2018 2017 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Less: accumulated amortization (875,243 ) (671,993 ) $ 964,757 $ 1,168,007 |
Summary of amortization expense over the estimated remaining lives of the patents and other intangible assets | Year Ending December 31, 2018 $ 67,750 2019 271,000 2020 187,536 2021 97,000 2022 97,000 Thereafter 244,471 $ 964,757 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accrued Expenses [Abstract] | |
Summary of accrued expenses | September 30, December 31, 2018 2017 Accrued payroll and related expenses $ 4,183,895 $ 4,690,512 Accrued cost of revenues 1,204,828 940,032 Accrued professional fees 363,115 764,095 Accrued legal settlement - 3,500,000 Other accrued expenses 43,030 16,900 $ 5,794,868 $ 9,991,540 |
Capital Leases (Tables)
Capital Leases (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Capital Leases [Abstract] | |
Schedule of minimum future lease payments under the capital lease | Year Ending September 30, 2019 $ 3,739 2020 3,739 2021 3,739 2022 1,246 2023 - Total minimum lease payments 12,463 Less amount representing interest (365 ) Present value of net minimum lease payments $ 12,098 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations [Abstract] | |
Schedule of discontinued operations including balance sheets, statement of operations and statement of cash flows | September 30, December 31, 2018 2017 Property and equipment, net $ - $ 6,951 Other assets - 3,645 Assets from discontinued operations - 10,596 Accounts payable - 144,725 Accrued expenses - 6,368 Deferred revenue - 59,696 Liabilities from discontinued operations $ - $ 210,789 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenue Wireless applications $ - $ - $ - $ 53,298 Cost of Revenue Cost of revenue - 4,793 - 235,632 Gross loss - (4,793 ) - (182,334 ) Operating Expenses Sales and marketing - 410 - 32,980 General and administrative - 1,831 - 144,786 Depreciation and amortization - 2,178 - 9,279 Total operating expenses - 4,419 - 187,045 Other (Expense) Income - 12,000 - 56,535 Net loss from discontinued operations $ - $ 2,788 - $ (312,844 ) For the Nine Months Ended September 30, 2018 2017 Net cash used in discontinued operating activities $ - $ (206,456 ) Net cash provided by discontinued investing activities - 312,947 Net cash provided by discontinued financing activities - - Net increase in cash and cash equivalents $ - $ 106,491 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of company issued warrants | Warrants Exercise Price per Share Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance - 12/31/16 - $ - $ - - Grants 320,000 6.25 - Exercised - - - Cancellations - - - Balance - 12/31/17 320,000 $ 6.25 $ 6.25 4.49 Grants - - - Exercised - - - Cancellations - - - Balance - 09/30/18 320,000 $ 6.25 $ 6.25 4.08 |
Stock Incentive Plans [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock option activity | Stock Option Activity Under the Plans Stock Options Exercise Price per Share Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance - 12/31/16 2,293,214 $2.50 - $7.06 $ 3.93 3.62 Grants 1,936,000 $2.60 - $6.66 5.49 Exercised (158,482 ) $2.50 - $6.87 (3.53 ) Cancellations (1,396,691 ) $2.50 - $7.06 (4.06 ) Balance - 12/31/17 2,293,214 $2.50 - $6.76 $ 5.20 7.93 Grants 150,000 $2.17 - $6.01 4.73 Exercised (77,420 ) $2.50 - $4.00 2.90 Cancellations (712,859 ) $2.76 - $6.66 4.70 Balance - 09/30/18 1,652,935 $2.17 - $6.76 $ 5.45 6.96 |
Summary of estimated fair value of each option award granted | For the Nine Months Ended 2018 2017 Weighted Average Risk-Free Interest Rate 2.97 % 2.22 % Weighted Average Expected Volatility 94.85 % 96.70 % Dividend Yield - - Weighted Average Expected Option Term (Years) 9.27 7.64 Weighted Average Grant Date Fair Value $ 4.09 $ 4.20 |
Summary of nonvested options to purchase shares | Number of Options Weighted Average Exercise Non-Vested Balance - 12/31/16 1,282,026 $ 3.26 Grants 1,936,000 Vested (244,214 ) Forfeited (924,812 ) Non-Vested Balance - 12/31/17 2,049,000 $ 6.07 Grants 150,000 Vested (283,602 ) Forfeited (546,065 ) Non-Vested Balance - 09/30/18 1,369,333 $ 6.37 |
Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of restricted stock activity | Restricted Stock Activity Number of Shares Weighted Average Grant Date Fair Value Non-Vested Balance - 12/31/16 - $ - Grants 123,333 4.26 Vested (8,621 ) 4.35 Forfeited - - Non-Vested Balance - 12/31/17 114,713 $ 4.25 Grants 2,002,983 5.46 Vested (35,144 ) 4.27 Forfeited (278,873 ) 5.72 Non-Vested Balance - 09/30/18 1,803,679 $ 5.37 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Schedule of minimum future rental payments under non-cancellable operating leases | Remainder of 2018 $ 82,326 2019 329,304 2020 27,442 2021 - 2022 - $ 439,072 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Software development [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 3 years |
Equipment and computer hardware [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 5 years |
Office furniture [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives | 5 years |
Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, net estimated useful lives description | 5 years, or lease expiration if sooner |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | ||||
Media placement | $ 9,056,963 | $ 10,916,126 | $ 28,630,179 | $ 28,163,712 |
Licensing and royalties | 70,726 | 130,653 | ||
Total revenue | $ 9,056,963 | $ 10,986,852 | $ 28,630,179 | $ 28,294,365 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Textual) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Dec. 22, 2017 | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)Customer | Sep. 30, 2017USD ($)Customer | Dec. 31, 2017USD ($) | |
Summary of Significant Accounting Policies (Textual) | ||||||||
General and administrative | $ 132,593 | |||||||
Sales and marketing expenses | 52,869 | |||||||
Accumulated deficit | $ (171,807,285) | $ (171,807,285) | $ (155,817,749) | |||||
Net loss | $ (5,005,943) | $ (5,735,862) | $ (5,247,731) | $ (3,070,392) | (15,989,536) | (8,292,602) | ||
Net cash used in operating activities | $ (13,577,669) | $ (4,317,453) | ||||||
Maximum [Member] | ||||||||
Summary of Significant Accounting Policies (Textual) | ||||||||
Corporate income tax rate | 34.00% | |||||||
Minimum [Member] | ||||||||
Summary of Significant Accounting Policies (Textual) | ||||||||
Corporate income tax rate | 21.00% | |||||||
Revenue [Member] | ||||||||
Summary of Significant Accounting Policies (Textual) | ||||||||
Concentration risk, percentage | 18.00% | |||||||
Concentration risk, description | No individual customer accounted for more than 10%. | |||||||
Number of customer | Customer | 1 | |||||||
Accounts receivable [Member] | ||||||||
Summary of Significant Accounting Policies (Textual) | ||||||||
Concentration risk, percentage | 13.00% | |||||||
Concentration risk, description | No individual customer accounted for more than 10%. | |||||||
Number of customer | Customer | 1 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts Receivable, Net [Abstract] | ||
Accounts receivable | $ 9,627,719 | $ 13,546,304 |
Less: allowance for bad debts | (502,272) | (540,586) |
Accounts receivable, net | $ 9,125,447 | $ 13,005,718 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property and Equipment, Net [Abstract] | ||
Equipment and computer hardware | $ 261,803 | $ 250,589 |
Office furniture | 256,820 | 260,121 |
Leasehold improvements | 344,025 | 342,230 |
Equipment held under capital lease | 27,594 | 13,160 |
Property and equipment, gross | 890,241 | 866,100 |
Less: accumulated depreciation | (510,149) | (416,151) |
Property and equipment, net | $ 380,093 | $ 449,949 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property and Equipment, Net (Textual) | ||||
Depreciation expense | $ 41,014 | $ 37,391 | $ 122,208 | $ 113,516 |
Capitalized Software Developm_3
Capitalized Software Development Costs, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Capitalized Software Development Costs, Net [Abstract] | ||
Capitalized software development costs | $ 3,100,092 | $ 3,428,846 |
Less: accumulated amortization | (2,128,829) | (1,943,561) |
Capitalized software development costs, net | $ 971,263 | $ 1,485,285 |
Capitalized Software Developm_4
Capitalized Software Development Costs, Net (Details 1) | Sep. 30, 2018USD ($) |
Capitalized Software Development Costs, Net [Abstract] | |
2,018 | $ 181,210 |
2,019 | 508,316 |
2,020 | 204,254 |
2,021 | 77,483 |
Total | $ 971,263 |
Capitalized Software Developm_5
Capitalized Software Development Costs, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Capitalized Software Development Costs [Member] | ||||
Capitalized Software Development Costs, net (Textual) | ||||
Amortization expense | $ 185,769 | $ 228,782 | $ 602,013 | $ 666,875 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Intangible Assets [Abstract] | ||
Patent costs | $ 2,643,356 | $ 2,572,939 |
Less: accumulated amortization | (2,006,003) | (1,830,365) |
Patents, net | $ 637,353 | $ 742,574 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
2,018 | $ 181,210 | |
2,019 | 508,316 | |
2,020 | 204,254 | |
2,021 | 77,483 | |
Total | 637,353 | $ 742,574 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2,018 | 36,348 | |
2,019 | 145,393 | |
2,020 | 145,393 | |
2,021 | 68,445 | |
2,022 | 61,450 | |
Thereafter | 180,324 | |
Total | 637,353 | |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2,018 | 67,750 | |
2,019 | 271,000 | |
2,020 | 187,536 | |
2,021 | 97,000 | |
2,022 | 97,000 | |
Thereafter | 244,471 | |
Total | $ 964,757 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | $ 964,757 | $ 1,168,007 |
Less: accumulated amortization | (2,006,003) | (1,830,365) |
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] | ||
Less: accumulated amortization | $ (875,243) | $ (671,993) |
Intangible Assets (Details 3)
Intangible Assets (Details 3) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Balance as of January 1, 2018 | $ 6,444,225 |
No activity | |
Balance as of September 30, 2018 | 6,444,225 |
DoubleVision [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Balance as of January 1, 2018 | 4,549,928 |
No activity | |
Balance as of September 30, 2018 | 4,549,928 |
Hipcricket, Inc. [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Balance as of January 1, 2018 | 1,894,297 |
No activity | |
Balance as of September 30, 2018 | $ 1,894,297 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Intangible Assets (Textual) | ||||
Amortization expense - patents | $ 36,037 | $ 608,761 | $ 175,637 | $ 679,823 |
Amortization expense - intangible assets | $ 67,750 | $ 67,750 | $ 203,250 | $ 203,250 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accrued Expenses [Abstract] | ||
Accrued payroll and related expenses | $ 4,183,895 | $ 4,690,512 |
Accrued cost of revenues | 1,204,828 | 940,032 |
Accrued professional fees | 363,115 | 764,095 |
Accrued legal settlement | 3,500,000 | |
Other accrued expenses | 43,030 | 16,900 |
Accrued expenses | $ 5,794,867 | $ 9,911,540 |
Capital Leases (Details)
Capital Leases (Details) | Sep. 30, 2018USD ($) |
Capital Leases [Abstract] | |
2,019 | $ 3,739 |
2,020 | 3,739 |
2,021 | 3,739 |
2,022 | 1,246 |
2,023 | |
Total minimum lease payments | 12,463 |
Less amount representing interest | (365) |
Present value of net minimum lease payments | $ 12,098 |
Capital Leases (Details Textual
Capital Leases (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Capital Leases (Textual) | |||||
Equipment cost | $ 27,594 | $ 27,594 | $ 13,160 | ||
Depreciation charged to operations | 41,014 | $ 37,391 | $ 122,208 | $ 113,516 | |
Office equipment [Member] | |||||
Capital Leases (Textual) | |||||
Minimum future lease payments, term | 5 years | ||||
Purchase option on capital lease | 1 | $ 1 | |||
Interest charged to operations | 55 | 79 | 182 | 283 | |
Depreciation charged to operations | 1,380 | $ 658 | $ 3,899 | $ 1,973 | |
Lessee operating, Description | The Company leases office equipment under capital leases that expire in 2018 through 2022. | ||||
Office equipment [Member] | 2018 [Member] | |||||
Capital Leases (Textual) | |||||
Equipment cost | 13,160 | $ 13,160 | |||
Office equipment [Member] | 2022 [Member] | |||||
Capital Leases (Textual) | |||||
Equipment cost | $ 14,434 | $ 14,434 | |||
Office equipment [Member] | Minimum [Member] | |||||
Capital Leases (Textual) | |||||
Effective interest rate charged on capital leases | 1.75% | 1.75% | |||
Office equipment [Member] | Maximum [Member] | |||||
Capital Leases (Textual) | |||||
Effective interest rate charged on capital leases | 7.428% | 7.428% |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Discontinued Operations [Abstract] | ||
Property and equipment, net | $ 6,951 | |
Other assets | 3,645 | |
Assets from discontinued operations | 10,596 | |
Accounts payable | 144,725 | |
Accrued expenses | 6,368 | |
Deferred revenue | 59,696 | |
Liabilities from discontinued operations | $ 210,789 |
Discontinued Operations (Deta_2
Discontinued Operations (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Expenses | ||||
Net income (loss) from discontinued operations | $ 2,788 | $ (312,844) | ||
Wireless Applications [Member] | ||||
Revenue | ||||
Wireless applications | 53,298 | |||
Cost of Revenue | ||||
Cost of revenue | 4,793 | 235,632 | ||
Gross loss | (4,793) | (182,334) | ||
Operating Expenses | ||||
Sales and marketing | 410 | 32,980 | ||
General and administrative | 1,831 | 144,786 | ||
Depreciation and amortization | 2,178 | 9,279 | ||
Total operating expenses | 4,419 | 187,045 | ||
Other (Expense) Income | 12,000 | 56,535 | ||
Net income (loss) from discontinued operations | $ 2,788 | $ (312,844) |
Discontinued Operations (Deta_3
Discontinued Operations (Details 2) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Discontinued Operations [Abstract] | ||
Net cash used in discontinued operating activities | $ (206,456) | |
Net cash provided by discontinued investing activities | 312,947 | |
Net cash provided by discontinued financing activities | ||
Net increase in cash and cash equivalents | $ 106,491 |
Discontinued Operations (Deta_4
Discontinued Operations (Details Textual) | Feb. 07, 2017USD ($) |
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 payable 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 of the post-closing covenants not satisfied and therefore uncollectible, for a total sale price of $350,000. |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Income Taxes (Textual) | |
Legislative change in corporate income tax, description | On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the "Act"). The legislation significantly changed the U.S. tax law, including a reduction to the corporate income tax rate from a maximum of 34% to a flat 21% rate, effective January 1, 2018. |
Operating loss carryover, expiration date | Dec. 31, 2037 |
Income tax, description | The total impact to the Company's U.S. deferred taxes and current year tax provision related to the corporate rate reduction was approximately $8.2 million. |
Federal [Member] | |
Income Taxes (Textual) | |
Operating loss carryover | $ 60,370,288 |
State [Member] | |
Income Taxes (Textual) | |
Operating loss carryover | $ 49,323,229 |
Note Payable (Details)
Note Payable (Details) - USD ($) | Mar. 01, 2016 | Feb. 20, 2018 | Aug. 01, 2017 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Note Payable (Textual) | ||||||||
Aggregate amount of shares issued | $ 13,784,501 | |||||||
Debt instrument, term | 42 months | |||||||
Collateral agent assigned value | $ 500,000 | $ 500,000 | ||||||
Deferred revenue | 500,000 | |||||||
Interest expense from amortization | 0 | $ 70,726 | 0 | $ 130,653 | ||||
Interest expense | 0 | 47,280 | 0 | 374,287 | ||||
Amortization of discount | 0 | 430,108 | 794,548 | |||||
Accrual of termination fees charged to interest expense | 0 | $ 49,508 | 0 | $ 91,457 | ||||
TAR Group [Member] | ||||||||
Note Payable (Textual) | ||||||||
Note purchase agreement, description | The members of the TAR Group was dismissed with prejudice in exchange for a lump sum payment of $3.5 million from the Company to the TAR Group. | |||||||
Lump sum payment | $ 3,500,000 | |||||||
Note Purchase Agreement [Member] | ||||||||
Note Payable (Textual) | ||||||||
Issuance of common 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 Note 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 in February 2018, with the final payment on the last business day in 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 common 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 | |||||||
Description of LIBOR rate | The principal amount of the Note bore interest at a rate equal to LIBOR plus 9% per annum. Such interest was payable in cash, except that 2% per annum of such interest was to 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 is obligated to pay the Investors (a) 50% of Monetization Revenues until such time as the Investors have received $2,500,000 in the aggregate with respect to the Revenue Stream, (b) 30% of the Monetization Revenues thereafter, until such time that the Investors have received $5,000,000 in the aggregate with respect to the Revenue Stream, and (c) 10% of the Monetization Revenues thereafter, until the Revenue Stream has been fully satisfied. In addition, upon any acceleration of the Note and Revenue Stream, the Company is obligated to pay the Investors 100% of the Monetization Revenues until the Revenue Stream has been fully satisfied. The Company was also required to pay $350,000 to the Note Purchaser upon repayment of the Note, which payment was also made on August 1, 2017. | |||||||
Purchasers upon repayment of the notes | $ 350,000 | |||||||
Interest expense | 350,000 | |||||||
Proceeds of offering common stock and warrants | $ 4,900,000 | |||||||
Revenue stream, description | The Revenue Stream is the right to receive a portion of Monetization Revenues (as defined in the NPA) totaling (i) if paid in full prior to March 31, 2018, up to $5,000,000 and (ii) otherwise, up to $7,500,000; provided, that upon acceleration, the Revenue Stream shall represent an absolute entitlement to receive such amounts without regard to the existence of Monetization Revenues. |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | $ 997,729 | $ 666,290 | $ 3,157,883 | $ 1,262,268 |
Share based compensation, number of shares vested | 283,602 | 475,447 | 283,602 | 475,447 |
Restricted stock compensation expense | $ 289,277 | $ 55,879 | $ 1,994,423 | $ 55,879 |
General and administrative expense [Member] | ||||
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | 555,959 | 431,185 | 1,696,551 | |
General and administrative - discontinued operations | 437 | |||
Restricted stock compensation expense | 279,776 | 787,830 | ||
Sales and marketing expense [Member] | ||||
Stock Based Compensation (Textual) | ||||
Recognized stock-based compensation expense | 441,770 | $ 235,105 | $ 1,461,332 | |
General and administrative - discontinued operations | 54 | |||
Restricted stock compensation expense | $ 9,501 | $ 474,438 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | |
Apr. 21, 2014 | Sep. 30, 2018 | |
Related Party Transactions (Textual) | ||
Related party transactions, description | 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 to the JV ("Share of Proceeds"). SITO Mobile R&D IP, LLC and PMC have agreed to 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 a perpetual license in exchange for an upfront payment to the JV of $4,500,000, of which the Company received $1,350,000 and reported as earnings from the JV in 2017. | |
Licensing Agreement [Member] | ||
Related Party Transactions (Textual) | ||
Deferred revenue | $ 0 |
Fair Value (Details)
Fair Value (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Fair Value (Textual) | ||
Net gain on revaluation of the warrants | $ 182,048 | $ 1,157,568 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | ||||
Exercised | (95,231) | |||
Employee Stock Option [Member] | $2.50 - $7.06 [Member] | ||||
Stock Options | ||||
Balance | 2,293,214 | |||
Balance | 2,293,214 | |||
Weighted Average Exercise Price | ||||
Balance | $ 3.93 | |||
Balance | $ 3.93 | |||
Weighted Average Remaining Life (Years) | 7 years 11 months 4 days | 3 years 7 months 13 days | ||
Employee Stock Option [Member] | $2.60 - $6.66 [Member] | ||||
Stock Options | ||||
Grants | 1,936,000 | |||
Weighted Average Exercise Price | ||||
Grants | $ 5.49 | |||
Employee Stock Option [Member] | $2.50 - $6.87 [Member] | ||||
Stock Options | ||||
Exercised | (158,482) | |||
Weighted Average Exercise Price | ||||
Exercised | $ (3.53) | |||
Employee Stock Option [Member] | $2.50 - $7.06 [Member] | ||||
Stock Options | ||||
Cancellations | (1,396,691) | |||
Weighted Average Exercise Price | ||||
Cancellations | $ (4.06) | |||
Employee Stock Option [Member] | $2.50 - $6.76 [Member] | ||||
Stock Options | ||||
Balance | 2,293,214 | |||
Balance | 2,293,214 | |||
Weighted Average Exercise Price | ||||
Balance | $ 5.20 | $ 3.93 | ||
Balance | $ 5.20 | $ 3.93 | ||
Weighted Average Remaining Life (Years) | 6 years 6 months 18 days | |||
Employee Stock Option [Member] | $2.17 - $6.01 [Member] | ||||
Stock Options | ||||
Grants | 150,000 | |||
Weighted Average Exercise Price | ||||
Grants | $ 4.73 | |||
Employee Stock Option [Member] | $2.50 - $4.00 [Member] | ||||
Stock Options | ||||
Exercised | (77,420) | |||
Weighted Average Exercise Price | ||||
Exercised | $ 2.90 | |||
Employee Stock Option [Member] | $2.76 - $6.66 [Member] | ||||
Stock Options | ||||
Cancellations | (712,859) | |||
Weighted Average Exercise Price | ||||
Cancellations | $ 4.70 | |||
Employee Stock Option [Member] | $2.17 - $6.76 [Member] | ||||
Stock Options | ||||
Balance | 2,293,214 | |||
Balance | 1,652,935 | 1,652,935 | 2,293,214 | |
Weighted Average Exercise Price | ||||
Balance | $ 5.20 | |||
Balance | $ 5.45 | $ 5.45 | $ 5.20 | |
Weighted Average Remaining Life (Years) | 6 years 11 months 15 days |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - Stock Incentive Plans [Member[ - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted Average Risk-Free Interest Rate | 2.97% | 2.22% |
Weighted Average Expected Volatility | 94.85% | 96.70% |
Dividend Yield | ||
Weighted Average Expected Option Term (Years) | 9 years 3 months 8 days | 7 years 7 months 21 days |
Weighted Average Grant Date Fair Value | $ 4.09 | $ 4.20 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Number of Options | |||||
Vested | (283,602) | (475,447) | (283,602) | (475,447) | |
Equity Option [Member] | |||||
Number of Options | |||||
Beginning balance | 2,049,000 | 1,282,026 | 1,282,026 | ||
Grants | 150,000 | 1,936,000 | |||
Vested | (283,602) | (244,214) | |||
Forfeited | (546,065) | (924,812) | |||
Ending balance | 1,369,333 | 1,369,333 | 2,049,000 | ||
Weighted Average Exercise Price | |||||
Beginning balance | $ 6.07 | $ 3.26 | $ 3.26 | ||
Grants | |||||
Vested | |||||
Forfeited | |||||
Ending balance | $ 6.37 | $ 6.37 | $ 6.07 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Number of shares | |||||
Vested | (283,602) | (475,447) | (283,602) | (475,447) | |
Restricted Stock [Member] | |||||
Number of shares | |||||
Beginning balance | 114,713 | ||||
Grants | 2,002,983 | 123,333 | |||
Vested | (35,144) | (8,621) | |||
Forfeited | (278,873) | ||||
Ending balance | 1,803,679 | 1,803,679 | 114,713 | ||
Weighted Average Grant Date Fair Value | |||||
Beginning balance | $ 4.25 | ||||
Grants | 5.46 | 4.26 | |||
Vested | 4.27 | 4.35 | |||
Forfeited | 5.72 | ||||
Ending balance | $ 5.37 | $ 5.37 | $ 4.25 |
Stockholders' Equity (Details 4
Stockholders' Equity (Details 4) - Warrant [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Warrants, Beginning balance | 320,000 | |
Warrants, Grants | 320,000 | |
Warrants, Exercised | ||
Warrants, Cancellations | ||
Warrants, Ending balance | 320,000 | 320,000 |
Exercise Price per Share, Beginning Balance | $ 6.25 | |
Exercise Price per Share, Grants | 6.25 | |
Exercise Price per Share, Exercised | ||
Exercise Price per Share, Cancellations | ||
Exercise Price per Share, Ending Balance | 6.25 | 6.25 |
Weighted Average Exercise Price, Beginning Balance | 6.25 | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Cancelled | ||
Weighted Average Exercise Price, Ending Balance | $ 6.25 | $ 6.25 |
Weighted Average Remaining Life (Years), Ending Balance | 4 years 29 days | 4 years 5 months 27 days |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stockholders' Equity (Textual) | ||||||
Shares issued on exercise of stock options, shares | 95,231 | |||||
Gross proceeds from exercise of stock options | $ 116,251 | $ 2,500 | ||||
Recognized compensation related to restricted stock unit grants | ||||||
Immaterial and recorded as an out-of-period adjustment | $ 500,000 | |||||
Warrant [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Warrants to purchase of common stock | 320,000 | 320,000 | ||||
Stock Incentive Plans [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of common stock shares | 1,234,896 | |||||
Shares issued on exercise of stock options, shares | 34,896 | |||||
Gross proceeds from exercise of stock options | $ 5,684,069 | |||||
Shares of common stock issued for legal and accounting services | 1,200,000 | |||||
Shares reserved for issuance of stock options | 2,500,000 | 2,500,000 | ||||
Shares available for grant | 861,631 | 861,631 | ||||
Recognized compensation expense | $ 997,729 | $ 666,290 | $ 3,157,883 | $ 1,262,268 | ||
Restricted Stock [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Recognized compensation related to restricted stock unit grants | 289,277 | $ 55,879 | $ 1,994,423 | $ 55,879 | ||
Restricted stock granted expected to recognized over remaining average period | 1 year 6 months | |||||
Additional compensation expense | $ 1,460,232 | |||||
Common Stock [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of common stock shares | 2,990,000 | |||||
Shares issued on exercise of stock options, shares | 77,420 | |||||
Recognized compensation related to restricted stock unit grants | 95 | $ 4 | $ 9 | |||
Common Stock [Member] | Option [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of common stock shares | 3,398,007 | 1,269,413 | ||||
Shares issued on exercise of stock options, shares | 77,420 | 69,413 | ||||
Gross proceeds from exercise of stock options | $ 116,251 | $ 2,500 | ||||
Shares issued in cashless exercise | 5,684,069 | |||||
Shares issued of common stock | 1,200,000 | |||||
Common Stock [Member] | 2017 Annual Bonus Plan [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Issuance of common stock shares | 222,425 | |||||
Shares issued for legal and accounting services, value | $ 14,842,750 | |||||
Shares issued vesting of restricted stock units | 108,162 | |||||
Legal and accounting service fees | $ 1,058,249 | $ 1,058,249 | ||||
Shares issued of common stock | 2,990,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Sep. 30, 2018USD ($) |
Schedule of minimum future rental payments under non-cancellable operating leases | |
Remainder of 2018 | $ 82,326 |
2,019 | 329,304 |
2,020 | 27,442 |
2,021 | |
2,022 | |
Total | $ 439,072 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Feb. 20, 2018 | Nov. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Loss Contingencies [Line Items] | ||||||
Rent expense | $ 153,248 | $ 125,061 | $ 508,386 | $ 343,405 | ||
TAR Group [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Lump sum payment | $ 3,500,000 | |||||
Fort Ashford Funds, LLC [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Option to purchase, per share | $ 0.50 | |||||
Option to purchase, share of common stock | 5,000,000 | |||||
Stock Incentive Plans [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Option to purchase, share of common stock | 1,234,896 | |||||
Jersey [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Lease expiration period | 5 years | |||||
Lease expiration, date | Jan. 31, 2020 |