Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | ||
Sep. 30, 2017 | Nov. 07, 2017 | ||
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Snap Interactive, Inc | ||
Entity Central Index Key | 1,355,839 | ||
Trading Symbol | STVI | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | Q3 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | [1] | 6,517,745 | |
[1] | Excludes 158,571 shares of unvested restricted stock. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 3,300,267 | $ 4,162,596 |
Credit card holdback receivable | 157,250 | 172,169 |
Accounts receivable, net of allowances and reserves of $46,858 and $57,674, respectively | 529,593 | 958,695 |
Prepaid expense and other current assets | 472,684 | 1,047,483 |
Total current assets | 4,459,794 | 6,340,943 |
Property and equipment, net | 635,160 | 793,305 |
Goodwill | 13,086,472 | 14,304,667 |
Intangible assets, net | 4,341,630 | 5,605,193 |
Other receivables | 51,814 | 82,435 |
Other assets | 66,807 | 397,608 |
Total assets | 22,641,677 | 27,524,151 |
Current liabilities: | ||
Accounts payable | 1,961,950 | 1,665,831 |
Accrued expenses and other current liabilities | 689,022 | 472,406 |
Deferred subscription revenue | 2,624,018 | 2,828,827 |
Total current liabilities | 5,274,990 | 4,967,064 |
Deferred rent, net of current portion | 261,286 | |
Deferred tax liability | 1,452,339 | |
Total liabilities | 5,274,990 | 6,680,689 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized; and 6,719,199 and 6,714,915 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 6,719 | 6,715 |
Additional paid-in capital | 16,916,791 | 15,865,568 |
Retained earnings | 443,177 | 4,971,179 |
Total stockholders' equity | 17,366,687 | 20,843,462 |
Total liabilities and stockholders' equity | $ 22,641,677 | $ 27,524,151 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowances and reserves on accounts receivables | $ 46,858 | $ 57,674 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 6,719,199 | 6,714,915 |
Common stock, shares outstanding | 6,719,199 | 6,714,915 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Subscription revenue | $ 5,447,119 | $ 4,181,950 | $ 17,413,511 | $ 12,443,530 |
Advertising revenue | 480,356 | 465,998 | 1,472,505 | 1,497,683 |
Total revenues | 5,927,475 | 4,647,948 | 18,886,016 | 13,941,213 |
Costs and expenses: | ||||
Cost of revenue | 1,228,198 | 1,120,788 | 3,753,522 | 3,746,847 |
Sales and marketing expense | 1,944,488 | 862,639 | 6,310,931 | 2,724,703 |
Product development expense | 2,217,777 | 1,864,430 | 6,635,561 | 6,384,620 |
General and administrative expense | 2,549,112 | 867,900 | 6,735,737 | 1,884,794 |
Total costs and expenses | 7,939,575 | 4,715,757 | 23,435,751 | 14,740,964 |
Loss from operations | (2,012,100) | (67,809) | (4,549,735) | (799,751) |
Interest income, net | 7,765 | 39,643 | 802 | |
Other (expense) income, net | 0 | 243 | (17,910) | 30,000 |
Loss before provision for income taxes | (2,004,335) | (67,566) | (4,528,002) | (768,949) |
Provision for income taxes | 0 | 341,366 | 0 | 341,366 |
Net (loss) income | $ (2,004,335) | $ 273,800 | $ (4,528,002) | $ (427,583) |
Net (loss) income per share of common stock: | ||||
Basic and diluted | $ (0.31) | $ 0.22 | $ (0.70) | $ (0.35) |
Weighted average number of shares of common stock used in calculating net loss per share of common stock: | ||||
Basic and diluted | 6,452,292 | 1,233,996 | 6,449,572 | 1,233,996 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings |
Balance at Dec. 31, 2016 | $ 20,843,462 | $ 6,715 | $ 15,865,568 | $ 4,971,179 |
Balance, shares at Dec. 31, 2016 | 6,714,915 | |||
Stock-based compensation expense for restricted stock awards and stock options | 1,033,143 | 1,033,143 | ||
Shares issued for consulting services | 19,800 | $ 6 | 19,794 | |
Shares issued for consulting services, shares | 6,000 | |||
Cancellation of common stock | (1,716) | $ (2) | (1,714) | |
Cancellation of common stock, shares | (1,716) | |||
Net loss for the period | (4,528,002) | (4,528,002) | ||
Balance at Sep. 30, 2017 | $ 17,366,687 | $ 6,719 | $ 16,916,791 | $ 443,177 |
Balance, shares at Sep. 30, 2017 | 6,719,199 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (4,528,002) | $ (427,583) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation of property and equipment | 355,348 | 321,167 |
Amortization of intangible assets | 1,263,563 | 413,317 |
Loss on disposal of property and equipment | 17,074 | |
Stock-based compensation expense | 1,033,143 | 118,001 |
Common stock issued for services | 19,800 | |
Cancellation of common stock | (1,716) | |
Bad debt expense | 79,486 | |
Deferred tax asset | (341,366) | |
Changes in operating assets and liabilities: | ||
Credit card holdback receivable | 14,919 | 138,800 |
Accounts receivable | 349,616 | 289,947 |
Other assets | 20,361 | (50,519) |
Prepaid expenses and other current assets | 574,799 | (188,607) |
Accounts payable, accrued expenses and other current liabilities | 575,510 | 380,632 |
Deferred rent | 4,775 | |
Deferred subscription revenue | (438,953) | (352,215) |
Net cash (used in) provided by operating activities | (660,277) | 301,574 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (214,277) | (157,897) |
Return of security deposit | 75,000 | |
Net cash used in investing activities | (139,277) | (157,897) |
Cash flows from financing activities: | ||
Payments of capital lease obligations | (62,775) | |
Net cash used in financing activities | (62,775) | |
Net (decrease) increase in cash and cash equivalents | (862,329) | 143,677 |
Balance of cash and cash equivalents at beginning of period | 4,162,596 | 6,676,557 |
Balance of cash and cash equivalents at end of period | 3,300,267 | 6,820,234 |
Supplemental disclosure of cash flow information: | ||
Cash paid in interest | 12,899 | 560 |
Cash paid in taxes | 26,210 | |
Measurement period adjustments: | ||
Goodwill | 1,218,195 | |
Deferred tax liability | 1,452,339 | |
Deferred subscription revenue | $ 234,144 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization and Basis of Presentation [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Under U.S. generally accepted accounting principles (“GAAP”), the AVM Merger is treated as a “reverse merger” under the acquisition method of accounting. For accounting purposes, AVM is considered to have acquired SNAP. Consequently, the historical financial statements reflect the operations and financial condition of AVM and operating results of SNAP are reported beginning on the closing date of the AVM Merger (collectively, the “Company”). The Company is an Internet software company. Under its registered trademarks, the Company develops and operates computer software that enables spontaneous global real time audio/video conversation via the internet and operates a portfolio of dating applications. The condensed consolidated financial statements included in this report have been prepared on a going concern basis in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. The Company has not included certain information normally included in annual financial statements pursuant to those rules and regulations, although it believes that the disclosure included herein is adequate to make the information presented not misleading. The condensed consolidated financial statements contained herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 28, 2017 (the “Form 10-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial information contains all normal and recurring adjustments necessary to fairly present the condensed consolidated balance sheet, results of operations, cash flows and changes in the stockholders’ equity of the Company for the interim periods presented. The Company’s historical results are not necessarily indicative of future operating results and the results for the three and nine months ended September 30, 2017 are not necessarily indicative of results for the year ending December 31, 2017, or for any other period. Reverse Stock Split The Company completed a 1-for-35 reverse stock split which became effective at the close of regular trading hours on January 5, 2017 and the Company’s common stock began trading on a post-reverse stock split basis at the opening of regular trading hours on January 6, 2017. Except as otherwise provided herein, all share and per-share amounts of the Company’s common stock and stock options have been adjusted to give effect to the reverse stock split for all periods presented. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies During the nine months ended September 30, 2017, there were no material changes to the Company’s significant accounting policies from those disclosed in the Form 10-K. Certain significant accounting policies relied on in the preparation of the accompanying unaudited condensed consolidated financial statements are as follows: Significant Estimates and Assumptions 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 at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the estimates used to determine the fair value of the Company’s common stock up until the time of the AVM Merger, stock options issued in share based payment arrangements, collectability of the Company’s accounts receivable and the valuation allowance on deferred tax assets. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. The Company bases estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers Revenue Recognition - Principal versus Agent (reporting revenue gross versus net) Revenue from Contracts with Customers Identifying Performance Obligations and Licensing Revenue Recognition – New Scope Improvements and Practical Expedients In February 2016, the FASB issued ASU No. 2016-02, Leases In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) Simplifying the Accounting for Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net [Abstract] | |
Property and Equipment, Net | 3. Property and Equipment, Net Property and equipment, net consisted of the following at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 (unaudited) Computer equipment $ 3,706,017 $ 3,720,985 Website development 2,262,492 2,050,980 Furniture and fixtures 89,027 89,027 Leasehold improvements 32,726 32,726 Total property and equipment 6,090,262 5,893,718 Less: Accumulated depreciation (5,455,102 ) (5,100,413 ) Total property and equipment, net $ 635,160 $ 793,305 Depreciation expense for the three and nine months ended September 30, 2017 was $101,801 and $355,348, respectively, as compared to $120,294 and $321,167, respectively, for the three and nine months ended September 30, 2016. During May 2017, the Company disposed of approximately $17,000 of computer equipment and furniture and fixtures in relation to a relocation of its corporate office, which is reflected on the condensed consolidated balance sheets in property and equipment, net. The Company only holds property and equipment in the United States. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2017 | |
Business Combination [Abstract] | |
Business Combination | 4. Business Combination On October 7, 2016, AVM completed the AVM Merger with SNAP, pursuant to which SAVM Acquisition Corporation, SNAP’s former wholly owned subsidiary, merged with and into AVM, with AVM surviving as a wholly owned subsidiary of SNAP. The Company finalized the original valuation and as part of a revision for the AVM Merger, the Company made an adjustment to increase the fair value of the deferred revenue at the acquisition date by $234,144, offset by a decrease in deferred tax liability of $1,452,339, with a corresponding decrease to goodwill reflected in the accompanying condensed consolidated financial statements. Additionally, the change to the provisional amount resulted in amortization of deferred revenue of $65,000 during the three and nine months ended September 30, 2017. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net [Abstract] | |
Intangible Assets, Net | 5. Intangible Assets, Net Intangible assets, net consisted of the following at September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 (unaudited) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Patents $ 50,000 $ (20,625 ) $ 29,375 $ 50,000 $ (18,750 ) $ 31,250 Trade names, trademarks product names, URLs 1,555,000 (521,604 ) 1,033,396 1,555,000 (329,979 ) 1,225,021 Internally developed software 2,720,000 (1,800,030 ) 919,970 2,720,000 (1,498,029 ) 1,221,971 Subscriber/customer relationships 4,219,000 (2,001,111 ) 2,217,889 4,219,000 (1,338,799 ) 2,880,201 Lead pool 282,000 (141,000 ) 141,000 282,000 (35,250 ) 246,750 Total intangible assets $ 8,826,000 $ (4,484,370 ) $ 4,341,630 $ 8,826,000 $ (3,220,807 ) $ 5,605,193 Amortization expense for the three and nine months ended September 30, 2017 was $421,188 and $1,263,563, respectively, as compared to $137,771 and $413,317, respectively, for the three and nine months ended September 30, 2016. The estimated aggregate amortization expense for each of the next five years and thereafter will be $419,934 in 2017, $1,599,719 in 2018, $1,087,333 in 2019, $592,681 in 2020, $444,167 in 2021 and $197,796 thereafter. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following at September 30, 2017 and December 31, 2016: September 30, December 31, 2017 2016 (unaudited) Compensation, benefits and payroll taxes $ 287,475 $ 311,845 Other accrued expenses 401,547 160,561 Total accrued expenses and other current liabilities $ 689,022 $ 472,406 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity The Snap Interactive, Inc. Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016. A total of 181,604 shares of the Company’s common stock may be delivered pursuant to outstanding options awarded under the 2011 Plan, however no additional awards may be granted under such plan. The Snap Interactive, Inc. 2016 Long-Term Incentive Plan (the “2016 Plan”) was adopted by the Company’s stockholders on May 16, 2016 and permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. On May 25, 2017, the Company’s stockholders approved an amendment to the 2016 Plan to increase the maximum number of shares issuable pursuant to the 2016 Plan to 1,300,000 shares. In addition, the maximum number of shares of common stock that may be issued under the 2016 Plan may be increased by an indeterminate number of shares of common stock underlying outstanding awards issued under the 2011 Plan that are forfeited, expired, cancelled or settled in cash. As of September 30, 2017, there were 665,378 shares available for future issuance under the 2016 Plan. Stock Options The following table summarizes the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the following periods: Three Months Nine Months September 30, September 30, 2017 2017 Expected volatility 155.0 % 116.1%-155.0 % Expected life of option 6.3 5.0-7.0 Risk free interest rate 2.2 % 1.7%-2.1 % Expected dividend yield 0.0 % 0.0 % The expected life of the options is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the “simplified” method as prescribed by Staff Accounting Bulletin 110, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the Company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award. The Company estimates potential forfeitures of stock awards and adjusts recorded stock-based compensation expense accordingly. The Company estimates pre-vesting forfeitures primarily based on the Company’s historical experience and is adjusted to reflect actual forfeitures as the stock based awards vest. The following tables summarize stock option activity during the nine months ended September 30, 2017: Weighted Number of Average Exercise Options Price Stock Options: Outstanding at January 1, 2017 573,110 $ 6.94 Granted 367,150 3.75 Expired or canceled, during the period (119,684 ) 7.62 Forfeited, during the period (3,556 ) 5.16 Outstanding at September 30, 2017 817,020 $ 5.42 Exercisable at September 30, 2017 383,156 $ 7.81 During the nine months ended September 30, 2017, the Company entered into option cancellation and release agreements with three employees, pursuant to which each of the parties agreed to cancel outstanding options to purchase an aggregate of 77,312 shares of common stock of the Company at exercise prices ranging from $4.55 to $21.00 per share. In exchange for the cancellation of the options, the Company granted the employees replacement options to purchase an aggregate of 64,600 shares of common stock of the Company at exercise prices ranging from $3.36 to $6.00 per share. The incremental value of the modified options compared to the original options, both valued on the respective modification date, of $55,055 is being recognized over the vesting terms of the options. On April 13, 2017, the Company’s Board of Directors awarded Alexander Harrington, Chief Executive Officer, (i) a stock option representing the right to purchase 80,000 shares of common stock at an exercise price equal to $3.63 per share, with the shares underlying this stock option vesting 25% on the six month anniversary of the date of grant and the remaining three tranches vesting on each of the first, second and third anniversaries of the first vesting date, and (ii) a stock option representing the right to purchase 24,000 shares of common stock at an exercise price equal to $3.63 per share, with the shares underlying this stock option vesting based on the Company’s achievement of certain performance goals related to its annual revenues. In addition, on April 13, 2017, the Company’s Board of Directors awarded Jason Katz, Chief Operating Officer and Chairman of the Board of Directors, a stock option representing the right to purchase 70,000 shares of common stock at an exercise price equal to $3.63 per share, with (i) 17,500 of the underlying shares vesting based on the Company’s achievement of certain performance goals related to its earnings before interest, tax, depreciation, and amortization and (ii) 52,500 of the underlying shares vesting based on the Company’s achievement of certain performance goals related to its annual revenues. On May 5, 2017, the Compensation Committee of the Company’s Board of Directors awarded each of Mr. Harrington and Eric Sackowitz, Chief Technology Officer, a stock option representing the right to purchase 28,571 shares of common stock at an exercise price equal to $3.36 per share. The shares underlying these stock options vest in four equal installments on each anniversary of the date of grant. On September 30, 2017, the aggregate intrinsic value of stock options that were outstanding and exercisable was $17,565 and $9,972, respectively. On September 30, 2016, the aggregate intrinsic value of stock options that were outstanding and exercisable was $235,860 and $225,170, respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date. The aggregate fair value for the options granted during the nine months ended September 30, 2017 was $966,560. The aggregate fair value for the options granted during the nine months ended September 30, 2016 was $87,000. Stock-based compensation expense for the Company’s stock options included in the condensed consolidated statements of operations is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Cost of revenue $ 333 $ - $ 3,279 $ - Sales and marketing expense 1,039 - 908 - Product development expense 3,396 5,590 36,628 113,592 General and administrative expense 148,714 660 436,206 4,409 Total stock compensation expense $ 153,482 $ 6,250 $ 477,021 $ 118,001 At September 30, 2017, there was $1,171,251 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.0 years. Restricted Stock Awards The following table summarizes restricted stock award activity for the nine months ended September 30, 2017: Weighted Average Number of Grant Date RSAs Fair Value Restricted Stock Awards: Outstanding at January 1, 2017 264,286 $ 20.29 Granted - - Expired or canceled, during the period - - Forfeited, during the period - - Outstanding at September 30, 2017 264,286 $ 20.29 At September 30, 2017, there was $1,482,991 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 1.8 years. Stock-based compensation expense relating to restricted stock awards for the three and nine months ended September 30, 2017 was $185,374 and $556,122, respectively, as compared to $0 for the three and nine months ended September 30, 2016. Common Stock On May 18, 2017, we announced a stock repurchase plan to repurchase up to $1.0 million of our common stock for cash. The repurchase plan was automatically terminated pursuant to its terms on September 11, 2017 in connection with the public announcement of the proposed merger with LiveXLive. At the time of the termination of the repurchase plan, we had repurchased an aggregate of 2,346 shares of our common stock for an aggregate purchase price of $7,038. |
Net (Loss) Income Per Share
Net (Loss) Income Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss Per Share [Abstract] | |
Net Loss Per Share | 8. Net (Loss) Income Per Share Basic net loss per share of common stock is computed based upon the number of weighted average shares of common stock outstanding as defined by ASC Topic 260, Earnings Per Share. Diluted net loss per share of common stock includes the dilutive effects of stock options and stock equivalents. To the extent stock options are antidilutive, they are excluded from the calculation of diluted net loss per share of common stock. For the three and nine months ended September 30, 2017, 817,020 shares upon the exercise of outstanding stock options and 264,286 shares of unvested restricted stock were not included in the computation of diluted net loss per share because their inclusion would be antidilutive. For the three months ended September 30, 2016, diluted net income per share did not include the effect of any shares issuable upon the exercise of stock options as the exercise price of these options were not less than the average market price during the period. For the nine months ended September 30, 2016, 71,700 shares upon the exercise of outstanding stock options were not included in the computation of diluted net loss per share because their inclusion would be antidilutive. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2017 | |
Commitments [Abstract] | |
Commitments | 9. Commitments Operating Lease Agreements Total rent, utilities, real estate tax expense and commercial rent tax expense relating to operating lease agreements for the three and nine months ended September 30, 2017 were approximately $91,000 and $263,000, respectively, as compared to $33,460 and $314,055, respectively, for the three and nine months ended September 30, 2016. Capital Lease Agreements As result of the AVM Merger, the Company acquired five three-year capital lease agreements with Hewlett Packard Financial Services Company. The Company’s monthly payments under these capital leases are approximately $7,600. The Company recognizes these leases on the condensed consolidated balance sheet under accrued expenses and other current liabilities. Litigation, Claims and Assessments The Company may be a party in legal proceedings, claims and assessments arising in the ordinary course of business. The Company evaluates the need for a reserve for specific legal matters based on the probability of an unfavorable outcome and the reasonability of an estimable loss. No reserve was deemed necessary as of September 30, 2017. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events Restricted Awards Vesting On October 7, 2017, an aggregate of 105,715 shares of restricted stock held by Clifford Lerner, a member of the Company’s Board of Directors, vested. Pursuant to the terms of Mr. Lerner’s restricted stock awards, the Company withheld an aggregate of 43,405 of the vesting shares of restricted stock to satisfy Mr. Lerner’s tax withholding obligations incurred in connection with the vesting of the shares of restricted stock. Terminated LiveXLive Merger Agreement On September 6, 2017, the Company entered into an Agreement and Plan of Merger with LiveXLive Media, Inc. (“LiveXLive”), LXL Video Acquisition Corp., a wholly owned subsidiary of LiveXLive (“Merger Sub”), and Jason Katz, as the agent of the stockholders of the Company, pursuant to which the Company would have merged with and into Merger Sub, with Merger Sub surviving as a wholly owned subsidiary of LiveXLive (the “LiveXLive Merger Agreement”). On October 31, 2017, the Company provided a letter to LiveXLive that terminated the LiveXLive Merger Agreement, pursuant to Section 8.2(a) of the LiveXLive Merger Agreement, due to certain conditions of the LiveXLive Merger Agreement not having been fulfilled as of October 27, 2017, which relieved the Company of its obligations under the LiveXLive Merger Agreement. No termination fee was payable by the Company in connection with the termination of the LiveXLive Merger Agreement. Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued and determined that no other events or transactions are required to be disclosed herein. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Significant Estimates and Assumptions | Significant Estimates and Assumptions 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 at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these financial statements include the estimates used to determine the fair value of the Company’s common stock up until the time of the AVM Merger, stock options issued in share based payment arrangements, collectability of the Company’s accounts receivable and the valuation allowance on deferred tax assets. Management evaluates these estimates on an ongoing basis. Changes in estimates are recorded in the period in which they become known. The Company bases estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers Revenue Recognition - Principal versus Agent (reporting revenue gross versus net) Revenue from Contracts with Customers Identifying Performance Obligations and Licensing Revenue Recognition – New Scope Improvements and Practical Expedients In February 2016, the FASB issued ASU No. 2016-02, Leases In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) Simplifying the Accounting for Goodwill Impairment In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment, net | September 30, 2017 December 31, 2016 (unaudited) Computer equipment $ 3,706,017 $ 3,720,985 Website development 2,262,492 2,050,980 Furniture and fixtures 89,027 89,027 Leasehold improvements 32,726 32,726 Total property and equipment 6,090,262 5,893,718 Less: Accumulated depreciation (5,455,102 ) (5,100,413 ) Total property and equipment, net $ 635,160 $ 793,305 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net [Abstract] | |
Schedule of intangible assets, net | September 30, December 31, 2017 2016 (unaudited) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Patents $ 50,000 $ (20,625 ) $ 29,375 $ 50,000 $ (18,750 ) $ 31,250 Trade names, trademarks product names, URLs 1,555,000 (521,604 ) 1,033,396 1,555,000 (329,979 ) 1,225,021 Internally developed software 2,720,000 (1,800,030 ) 919,970 2,720,000 (1,498,029 ) 1,221,971 Subscriber/customer relationships 4,219,000 (2,001,111 ) 2,217,889 4,219,000 (1,338,799 ) 2,880,201 Lead pool 282,000 (141,000 ) 141,000 282,000 (35,250 ) 246,750 Total intangible assets $ 8,826,000 $ (4,484,370 ) $ 4,341,630 $ 8,826,000 $ (3,220,807 ) $ 5,605,193 |
Accrued Expenses and Other Cu20
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | September 30, December 31, 2017 2016 (unaudited) Compensation, benefits and payroll taxes $ 287,475 $ 311,845 Other accrued expenses 401,547 160,561 Total accrued expenses and other current liabilities $ 689,022 $ 472,406 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | Three Months Nine Months September 30, September 30, 2017 2017 Expected volatility 155.0 % 116.1%-155.0 % Expected life of option 6.3 5.0-7.0 Risk free interest rate 2.2 % 1.7%-2.1 % Expected dividend yield 0.0 % 0.0 % |
Summary of stock option activity | Weighted Number of Average Exercise Options Price Stock Options: Outstanding at January 1, 2017 573,110 $ 6.94 Granted 367,150 3.75 Expired or canceled, during the period (119,684 ) 7.62 Forfeited, during the period (3,556 ) 5.16 Outstanding at September 30, 2017 817,020 $ 5.42 Exercisable at September 30, 2017 383,156 $ 7.81 |
Schedule of stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Cost of revenue $ 333 $ - $ 3,279 $ - Sales and marketing expense 1,039 - 908 - Product development expense 3,396 5,590 36,628 113,592 General and administrative expense 148,714 660 436,206 4,409 Total stock compensation expense $ 153,482 $ 6,250 $ 477,021 $ 118,001 |
Schedule of restricted stock award activity | Weighted Average Number of Grant Date RSAs Fair Value Restricted Stock Awards: Outstanding at January 1, 2017 264,286 $ 20.29 Granted - - Expired or canceled, during the period - - Forfeited, during the period - - Outstanding at September 30, 2017 264,286 $ 20.29 |
Organization and Basis of Pre22
Organization and Basis of Presentation (Details) | Jan. 05, 2017 |
Organization and Basis of Presentation (Textual) | |
Reverse stock split, description | 1-for-35 reverse stock split |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,090,262 | $ 5,893,718 |
Less: Accumulated depreciation | (5,455,102) | (5,100,413) |
Total property and equipment, net | 635,160 | 793,305 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 3,706,017 | 3,720,985 |
Website development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,262,492 | 2,050,980 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 89,027 | 89,027 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 32,726 | $ 32,726 |
Property and Equipment, Net (24
Property and Equipment, Net (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property and Equipment, Net (Textual) | |||||
Depreciation expense | $ 101,801 | $ 120,294 | $ 355,348 | $ 321,167 | |
Computer equipment and furniture and fixtures disposed | $ 17,000 |
Business Combination (Details)
Business Combination (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Business Combination (Textual) | ||
Fair value of deferred revenue | $ 234,144 | |
Decrease in deferred tax liability | $ 1,452,339 | 1,452,339 |
Amortization of deferred revenue | $ 65,000 | $ 65,000 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 8,826,000 | $ 8,826,000 |
Accumulated Amortization | (4,484,370) | (3,220,807) |
Net Carrying Amount | 4,341,630 | 5,605,193 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (20,625) | (18,750) |
Net Carrying Amount | 29,375 | 31,250 |
Trade names, trademarks product names, URLs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,555,000 | 1,555,000 |
Accumulated Amortization | (521,604) | (329,979) |
Net Carrying Amount | 1,033,396 | 1,225,021 |
Internally developed software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,720,000 | 2,720,000 |
Accumulated Amortization | (1,800,030) | (1,498,029) |
Net Carrying Amount | 919,970 | 1,221,971 |
Subscriber/customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,219,000 | 4,219,000 |
Accumulated Amortization | (2,001,111) | (1,338,799) |
Net Carrying Amount | 2,217,889 | 2,880,201 |
Lead pool [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 282,000 | 282,000 |
Accumulated Amortization | (141,000) | (35,250) |
Net Carrying Amount | $ 141,000 | $ 246,750 |
Intangible Assets, Net (Detai27
Intangible Assets, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Intangible Assets, Net (Textual) | ||||
Amortization expense | $ 421,188 | $ 137,771 | $ 1,263,563 | $ 413,317 |
Estimated aggregate amortization expense for 2017 | 419,934 | 419,934 | ||
Estimated aggregate amortization expense for 2018 | 1,599,719 | 1,599,719 | ||
Estimated aggregate amortization expense for 2019 | 1,087,333 | 1,087,333 | ||
Estimated aggregate amortization expense for 2020 | 592,681 | 592,681 | ||
Estimated aggregate amortization expense for 2021 | 444,167 | 444,167 | ||
Estimated aggregate amortization expense, thereafter | $ 197,796 | $ 197,796 |
Accrued Expenses and Other Cu28
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued Expenses and Other Current Liabilities [Abstract] | ||
Compensation, benefits and payroll taxes | $ 287,475 | $ 311,845 |
Other accrued expenses | 401,547 | 160,561 |
Total accrued expenses and other current liabilities | $ 689,022 | $ 472,406 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Stock Options [Member] | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 155.00% | |
Expected life of option | 6 years 3 months 19 days | |
Risk free interest rate | 2.20% | |
Expected dividend yield | 0.00% | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 155.00% | |
Expected life of option | 7 years | |
Risk free interest rate | 2.10% | |
Expected dividend yield | 0.00% | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 116.10% | |
Expected life of option | 5 years | |
Risk free interest rate | 1.70% | |
Expected dividend yield | 0.00% |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - Stock Options [Member] | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Stock Options: | |
Number of Options, Outstanding beginning balance | shares | 573,110 |
Number of Options, Granted | shares | 367,150 |
Number of Options, Expired or canceled, during the period | shares | (119,684) |
Number of Options, Forfeited, during the period | shares | (3,556) |
Number of Options, Outstanding ending balance | shares | 817,020 |
Number of Options, Exercisable | shares | 383,156 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 6.94 |
Weighted Average Exercise Price, Granted | $ / shares | 3.75 |
Weighted Average Exercise Price, Expired or canceled, during the period | $ / shares | 7.62 |
Weighted Average Exercise Price, Forfeited, during the period | $ / shares | 5.16 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | 5.42 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 7.81 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | $ 1,033,143 | $ 118,001 | ||
Cost of revenue [Member] | ||||
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | $ 333 | 3,279 | ||
Sales and marketing expense [Member] | ||||
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | 1,039 | 908 | ||
Product development expense [Member] | ||||
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | 3,396 | 5,590 | 36,628 | 113,592 |
General and administrative expense [Member] | ||||
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | 148,714 | 660 | 436,206 | 4,409 |
Stock Options [Member] | ||||
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | $ 153,482 | $ 6,250 | $ 477,021 | $ 118,001 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - Restricted Stock Awards [Member] | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Restricted Stock Awards: | |
Number of RSAs, Outstanding beginning balance | shares | 264,286 |
Number of RSAs, Granted | shares | |
Number of RSAs, Expired or canceled, during the period | shares | |
Number of RSAs, Forfeited, during the period | shares | |
Number of RSAs, Outstanding ending balance | shares | 264,286 |
Weighted Average Grant Date Fair Value, Outstanding beginning balance | $ / shares | $ 20.29 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | |
Weighted Average Grant Date Fair Value, Expired or canceled, during the period | $ / shares | |
Weighted Average Grant Date Fair Value, Forfeited, during the period | $ / shares | |
Weighted Average Grant Date Fair Value, Outstanding ending balance | $ / shares | $ 20.29 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | May 05, 2017 | Apr. 13, 2017 | May 18, 2017 | May 25, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Stockholders' Equity (Textual) | ||||||||
Stock-based compensation expense | $ 1,033,143 | $ 118,001 | ||||||
Incremental modified compensation cost | $ 55,055 | |||||||
Stock repurchase plan to repurchase maximum of common stock for cash | $ 1,000,000 | |||||||
Repurchased aggregate shares of common stock | 2,346 | |||||||
Aggregate purchase price | $ 7,038 | |||||||
Maximum [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Options to purchase aggregate common stock exercise price, cancelled | $ 21 | |||||||
Options to purchase aggregate common stock exchanged exercise price per share | 6 | |||||||
Minimum [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Options to purchase aggregate common stock exercise price, cancelled | 4.55 | |||||||
Options to purchase aggregate common stock exchanged exercise price per share | $ 3.36 | |||||||
Alexander Harrington [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Stock option transaction description | (i) a stock option representing the right to purchase 80,000 shares of common stock at an exercise price equal to $3.63 per share, with the shares underlying this stock option vesting 25% on the six month anniversary of the date of grant and the remaining three tranches vesting on each of the first, second and third anniversaries of the first vesting date, and (ii) a stock option representing the right to purchase 24,000 shares of common stock at an exercise price equal to $3.63 per share, with the shares underlying this stock option vesting based on the Company's achievement of certain performance goals related to its annual revenues. In addition, on April 13, 2017, the Company's Board of Directors awarded Jason Katz, Chief Operating Officer and Chairman of the Board of Directors, a stock option representing the right to purchase 70,000 shares of common stock at an exercise price equal to $3.63 per share, with (i) 17,500 of the underlying shares vesting based on the Company's achievement of certain performance goals related to its earnings before interest, tax, depreciation, and amortization and (ii) 52,500 of the underlying shares vesting based on the Company's achievement of certain performance goals related to its annual revenues. | |||||||
Mr. Harrington [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Stock options, exercise price | $ 3.36 | |||||||
Stock option right to purchase | 28,571 | |||||||
Stock Options [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Stock options outstanding, intrinsic value | $ 17,565 | $ 235,860 | $ 17,565 | 235,860 | ||||
Stock options exercisable, intrinsic value | 9,972 | 225,170 | 9,972 | 225,170 | ||||
Aggregate fair value of options granted | 966,560 | 87,000 | ||||||
Total unrecognized compensation expense | 1,171,251 | $ 1,171,251 | ||||||
Weighted average expected recognition period of unrecognized compensation expense | 3 years | |||||||
Stock-based compensation expense | $ 153,482 | 6,250 | $ 477,021 | 118,001 | ||||
Options to purchase aggregate common stock shares, cancelled | 77,312 | |||||||
Options to purchase aggregate common stock exchanged shares | 64,600 | |||||||
Stock option transaction description | The options vest between one and four years and have a term of ten years. | |||||||
Aggregate purchase of common stock, shares | 58,696 | |||||||
Stock Options [Member] | Maximum [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Stock options, exercise price | $ 4.50 | |||||||
Stock Options [Member] | Minimum [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Stock options, exercise price | $ 3.34 | |||||||
Restricted Stock Awards [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Weighted average expected recognition period of unrecognized compensation expense | 1 year 9 months 18 days | |||||||
2016 Plan [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Number of shares issued under plan | 1,300,000 | |||||||
Number of stock available for future issuance | 665,378 | 665,378 | ||||||
Terminated date of future awards | May 16, 2016 | |||||||
2011 Plan [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Number of shares issued under plan | 181,604 | |||||||
Restricted Stock Awards One [Member] | ||||||||
Stockholders' Equity (Textual) | ||||||||
Total unrecognized compensation expense | $ 1,482,991 | $ 1,482,991 | ||||||
Stock-based compensation expense | $ 185,374 | $ 0 | $ 556,122 | $ 0 |
Net (Loss) Income Per Share (De
Net (Loss) Income Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Loss Per Share (Textual) | ||||
Shares exercise excluded from computation of diluted net loss per share | 817,020 | 71,700 | 817,020 | 71,700 |
Unvested restricted stock shares | 264,286 |
Commitments (Details)
Commitments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Commitments (Textual) | ||||
Monthly rent payment | $ 26,000 | |||
Security deposit | $ 200,659 | 200,659 | ||
Capital leases monthly payments | 7,600 | $ 7,600 | ||
Operating lease, description | The term of the lease originally ran until March 4, 2022. | |||
Total rent, utilities, real estate tax expense and commercial rent tax expense | $ 91,000 | $ 33,460 | $ 263,000 | $ 314,055 |
Merger, description | The Company acquired five three-year capital lease agreements with Hewlett Packard Financial Services Company. |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - Restricted Stock [Member] | Oct. 07, 2017shares |
Subsequent Event [Line Items] | |
Aggregate shares of restricted stock | 105,715 |
Aggregate vesting shares of restricted stock to tax withholding | 43,405 |