Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | ||
Sep. 30, 2018 | Nov. 02, 2018 | ||
Document and Entity Information [Abstract] | |||
Entity Registrant Name | PeerStream, Inc. | ||
Entity Central Index Key | 1,355,839 | ||
Trading Symbol | PEER | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | Q3 | ||
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 | [1] | 6,789,393 | |
[1] | Excludes 79,286 shares of unvested restricted stock. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 7,217,354 | $ 4,137,050 |
Credit card holdback receivable | 99,643 | 140,789 |
Accounts receivable, net of allowance for doubtful accounts of $37,821 and $42,006, respectively | 326,290 | 479,148 |
Prepaid expense and other current assets | 503,154 | 228,296 |
Total current assets | 8,146,441 | 4,985,283 |
Property and equipment, net | 579,519 | 622,712 |
Goodwill | 13,086,472 | 13,086,472 |
Intangible assets, net | 2,656,879 | 3,920,443 |
Digital tokens | 832,892 | |
Other assets | 115,861 | 149,537 |
Total assets | 25,418,064 | 22,764,447 |
Current liabilities: | ||
Accounts payable | 2,224,486 | 2,374,253 |
Accrued expenses and other current liabilities | 771,145 | 405,646 |
Deferred subscription revenue | 2,173,290 | 2,553,826 |
Deferred technology service revenue | 4,827,765 | |
Total current liabilities | 9,996,686 | 5,333,725 |
Total liabilities | 9,996,686 | 5,333,725 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value, 25,000,000 shares authorized; and 6,888,679 shares and 6,881,794 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 6,889 | 6,882 |
Additional paid-in capital | 19,580,800 | 18,346,914 |
Accumulated deficit | (4,166,311) | (923,074) |
Total stockholders' equity | 15,421,378 | 17,430,722 |
Total liabilities and stockholders' equity | $ 25,418,064 | $ 22,764,447 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 37,821 | $ 42,006 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 6,888,679 | 6,881,794 |
Common stock, shares outstanding | 6,888,679 | 6,881,794 |
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 | |
Revenues: | ||||
Subscription revenue | $ 4,906,640 | $ 5,447,119 | $ 15,317,865 | $ 17,413,511 |
Advertising revenue | 330,817 | 480,356 | 966,997 | 1,472,505 |
Technology service revenue | 1,448,330 | 3,540,362 | ||
Total revenues | 6,685,787 | 5,927,475 | 19,825,224 | 18,886,016 |
Costs and expenses: | ||||
Cost of revenue | 1,190,061 | 1,228,198 | 3,581,794 | 3,753,522 |
Sales and marketing expense | 1,383,567 | 1,944,488 | 4,266,434 | 6,310,931 |
Product development expense | 1,978,285 | 2,217,777 | 6,052,098 | 6,635,561 |
General and administrative expense | 2,169,849 | 2,549,112 | 6,679,349 | 6,735,737 |
Total costs and expenses | 6,721,762 | 7,939,575 | 20,579,675 | 23,435,751 |
Loss from operations | (35,975) | (2,012,100) | (754,451) | (4,549,735) |
Interest income, net | 28,603 | 7,765 | 48,313 | 39,643 |
Other expense, net | (17,910) | |||
Impairment loss on digital tokens | (575,831) | (2,535,235) | ||
Loss before provision for income taxes | (583,203) | (2,004,335) | (3,241,373) | (4,528,002) |
Benefit (provision) for income taxes | 13,636 | (1,864) | ||
Net loss | $ (569,567) | $ (2,004,335) | $ (3,243,237) | $ (4,528,002) |
Net loss per share of common stock: | ||||
Basic and diluted | $ (0.08) | $ (0.31) | $ (0.47) | $ (0.70) |
Weighted average number of shares of common stock used in calculating net loss per share of common stock: | ||||
Basic and diluted | 6,886,051 | 6,452,292 | 6,883,575 | 6,449,572 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 6,882 | $ 18,346,914 | $ (923,074) | $ 17,430,722 |
Balance, shares at Dec. 31, 2017 | 6,881,794 | |||
Stock-based compensation expense for restricted stock awards and stock options | 1,205,682 | 1,205,682 | ||
Reconciliation of shares issued in stock-based compensation arrangement | $ 1 | 1 | ||
Reconciliation of shares issued in stock-based compensation arrangement, shares | 522 | |||
Issuance of common stock for stock option exercises | $ 6 | 28,204 | 28,210 | |
Issuance of common stock for stock option exercises, shares | 6,363 | |||
Net loss | (3,243,237) | (3,243,237) | ||
Balance at Sep. 30, 2018 | $ 6,889 | $ 19,580,800 | $ (4,166,311) | $ 15,421,378 |
Balance, shares at Sep. 30, 2018 | 6,888,679 |
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 | $ (3,243,237) | $ (4,528,002) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation of property and equipment | 292,214 | 355,348 |
Amortization of intangible assets | 1,263,564 | 1,263,563 |
Loss on disposal of property and equipment | 17,074 | |
Stock-based compensation expense | 1,205,682 | 1,033,143 |
Reconciliation of shares issued in stock-based compensation arrangement | 1 | |
Common stock issued for services | 19,800 | |
Cancellation of common stock | (1,716) | |
Bad debt expense | 8,552 | 79,486 |
Digital tokens received as payment for services | (3,368,127) | |
Impairment loss on digital tokens | 2,535,235 | |
Changes in operating assets and liabilities: | ||
Credit card holdback receivable | 41,146 | 14,919 |
Accounts receivable | 144,306 | 349,616 |
Prepaid expenses and other current assets | (274,858) | 574,799 |
Other assets and other receivables | 33,676 | 25,136 |
Accounts payable, accrued expenses and other current liabilities | 215,732 | 575,510 |
Deferred subscription revenue | (380,536) | (438,953) |
Deferred technology service revenue | 4,827,765 | |
Net cash provided by (used in) operating activities | 3,301,115 | (660,277) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (249,021) | (214,277) |
Return of Security Deposit | 75,000 | |
Net cash used in investing activities | (249,021) | (139,277) |
Cash flows from financing activities: | ||
Payments of capital lease obligations | (62,775) | |
Proceeds from issuance of common stock for stock option exercises | 28,210 | |
Net cash provided by (used in) financing activities | 28,210 | (62,775) |
Net increase (decrease) in cash and cash equivalents | 3,080,304 | (862,329) |
Balance of cash and cash equivalents at beginning of period | 4,137,050 | 4,162,596 |
Balance of cash and cash equivalents at end of period | 7,217,354 | 3,300,267 |
Supplemental disclosure of cash flow information: | ||
Cash paid in interest | 12,899 | |
Cash paid for income taxes | $ 26,210 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation The accompanying condensed consolidated financial statements include PeerStream, Inc. and its wholly owned subsidiaries, A.V.M Software, Inc., Paltalk Software Inc., Paltalk Holdings, Inc., Tiny Acquisition Inc., Camshare, Inc., Fire Talk LLC, PeerStream Mobile Limited (UK) and Vumber LLC (collectively, the “Company,” “we,” “our” or “us”). Effective March 12, 2018, the Company changed its name from “Snap Interactive, Inc.” to “PeerStream, Inc.” In connection with the name change, the Company also changed its trading symbol on the OTCQB Marketplace from “STVI” to “PEER.” The Company is a global internet solutions provider pioneering the real-world adoption of emerging blockchain technologies by developing software, services and applications for corporate clients and consumers. The Company’s business solutions unit (“PeerStream Business Solutions”) is able to provide advisory and implementation services to enterprise clients to help them meet strategic objectives using blockchain technology. The Company is also able to offer support to enterprise clients seeking to transition to blockchain-based technologies through the licensing of proprietary blockchain software, such as the Company’s PeerStream Protocol (“PSP”), a protocol for decentralized multimedia communications and live video streaming that is currently in development. The condensed consolidated financial statements included in this report have been prepared on a going concern basis in accordance with generally accepted accounting principles in the United States (“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 and notes required by GAAP for complete 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, 2017, filed with the SEC on March 22, 2018 (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 nine months ended September 30, 2018 are not necessarily indicative of results for the year ending December 31, 2018, or for any other period. Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the current presentation. These reclassifications have no impact on the previously reported net loss. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see the Form 10-K. During the nine months ended September 30, 2018, other than the following, there were no significant changes made to the Company’s significant accounting policies. 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 stock options issued in share based payment arrangements, collectability of the Company’s accounts receivable, revenue recognition under time based service contracts 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. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) In June 2018, the FASB issued an ASU to simplify several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718, Compensation—Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. The amendments in this ASU are effective for the Company on January 1, 2019. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements. Revenue In accordance with ASC 606, revenue from contracts with customers is recognized when control of the promised services is transferred to our customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Sales tax is excluded from reported revenue. Subscription Revenue The Company generates subscription revenue primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. Subscriptions are generally offered in durations of one-, three-, six- and twelve- month terms. All subscription fees, however, are paid by credit card at the origination of the subscription regardless of the term of the subscription, therefore determining the fixed transaction price. Revenues from multi-month subscriptions are recognized on a straight-line basis over the period where the service is offered to our customer, indicated by length of the subscription term purchased. The unearned portion of subscription revenue is presented as deferred revenue in the accompanying condensed consolidated balance sheets. The deferred revenue at December 31, 2017 was $2,553,826, of which approximately $1,925,104 was subsequently recognized as subscription revenue during the nine months ended September 30, 2018. The ending balance of deferred revenue at September 30, 2018 was $2,173,290. In addition, the Company offers virtual gifts and micro-transactions to its users. Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items. These gifts are given among users to enhance communication and are typically redeemed within the month of purchase. Upon purchase, the virtual gifts are credited to the users’ account and is under the users’ control. Virtual gift and micro-transaction revenue are recognized upon the users’ utilization of the virtual gift at the fixed transaction price on a gross basis and included in subscription revenue in the accompanying condensed consolidated statements of operations. Virtual gift and micro-transaction revenue was approximately $1,883,582 and $5,636,505 for the three and nine months ended September 30, 2018, respectively. Advertising Revenue The Company generates advertising revenue from the display of advertisements on its products through contractual agreements with third parties that are based on the number of advertising impressions delivered. When a customer clicks an advertisement (CPC basis), views an advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through the application (CPA basis), the amount earned is recognized as revenue. Revenue related to fixed fee arrangements is recognized ratably over the service period. In determining whether an arrangement exists, the Company ensures that an agreement has been fully executed. Advertising revenue is dependent upon traffic as well as the advertising inventory placed on the Company’s products. Technology Service Revenue Revenue related to the technology services agreement with ProximaX Limited (“ProximaX”), which is a fixed-price contract, is recognized as the services are performed and payment is earned. The Company accounts for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. Accordingly, revenue under the technology services agreement with ProximaX is recognized based upon proportional performance using labor hours as the unit of measurement. The contractual upfront fee included $5.0 million and was paid in the Ethereum cryptocurrency and subsequently converted into U.S. dollars. The upfront fee also included 216.0 million tokens related to our familiarization with the client’s technology and the build-out of a roadmap used to fulfill the contract. The total upfront fee is recognized as revenue under the input method based on proportional performance using labor hours as the unit of measurement. The unearned portion is presented as deferred technology service revenue in the accompanying condensed consolidated balance sheets. Revisions to the Company’s estimates may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified. If the Company’s estimates indicate that a contract loss will be incurred, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated costs of the contract exceed the estimated total revenues that will be generated by the contract and are included in cost of revenues in the Company’s condensed consolidated statement of operations. There were no contract losses for the periods presented. The remaining $5.0 million in payments under the technology services agreement will be recognized as revenue upon the Company’s fulfillment of contractually defined milestones. Digital Tokens Digital tokens consist of XPX tokens received in connection with the technology services agreement with ProximaX. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital tokens under current GAAP, the Company has determined to account for these tokens as indefinite-lived intangible assets in accordance with ASC 350: Intangibles—Goodwill and Other for the period covered by this report and in future reports unless and until further guidance is issued by the FASB. Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. Fair value of the digital tokens is based on the quoted market prices on the Kryptono Exchange. The Company recorded an impairment charge in the amount of $575,831 and $2,535,235, which is reported as a component of other income and expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2018, respectively. The Company previously accounted for these tokens as financial assets under ASC 825: Financial Instruments for the quarter ended June 30, 2018. Management performed the review required by Staff Accounting Bulletins (“SAB”) 108 and SAB 99 on the error and determined the error had no material impact on the financial statements of the Company as of and for the period ended June 30, 2018. The amount of the charge has not changed as a result of the correction. The description of the account has changed from “Changes in fair value of digital tokens” to “Impairment loss on digital tokens” on the statements of operations and cash flows. In addition, the error did not have an effect on the net loss from operations, net loss and related net loss per share for any of the prior 2018 interim periods. Since the previously-issued financial statements are not materially misstated, the error is corrected prospectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements The fair value framework under the FASB’s guidance requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows: ● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and ● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability. The Company reviews the appropriateness of fair value measurements including validation processes, and the reconciliation of period-over-period fluctuations based on changes in key market inputs. All fair value measurements are subject to the Company’s analysis. Review and approval by management is required as part of the validation process. The following tables show the Company’s cash and investments by significant investment category as of September 30, 2018: Adjusted Cost Change in Fair Value Fair Value Cash and Cash Equivalents Cash $ 649,074 $ - $ 649,074 $ 649,074 Level 1: Money market funds 302,663 - 302,663 302,663 U.S. Treasury securities 6,265,617 - 6,265,617 6,265,617 Subtotal 6,568,280 - 6,568,280 6,568,280 Total $ 7,217,354 $ - $ 7,217,354 $ 7,217,354 Fair Value Methods The accounting guidance for financial instruments requires disclosures of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate their fair value. Cash equivalents consist primarily of money market instruments and U.S. Treasury bills, and represent highly liquid investments with maturities of three months or less at purchase. The carrying value of cash equivalents is assumed to approximate fair value due to its short duration and generally negligible credit risk. The Company validates this assumption using quoted market prices where available. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net consisted of the following at September 30, 2018 and December 31, 2017: September 30, December 31, (unaudited) Computer equipment $ 3,706,017 $ 3,706,017 Website development 2,591,463 2,342,442 Furniture and fixtures 89,027 89,027 Leasehold improvements 32,726 32,726 Total property and equipment 6,419,233 6,170,212 Less: Accumulated depreciation (5,839,714 ) (5,547,500 ) Total property and equipment, net $ 579,519 $ 622,712 Depreciation expense for the three and nine months ended September 30, 2018 was $86,076 and $292,214, respectively, as compared to $101,801 and $355,348, respectively, for the three and nine months ended September 30, 2017. The Company only holds property and equipment in the United States. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 5. Intangible Assets, Net Intangible assets, net consisted of the following at September 30, 2018 and December 31, 2017: September 30, December 31, 2018 2017 (unaudited) Gross Accumulated Net Gross Accumulated Net Patents $ 50,000 $ (23,125 ) $ 26,875 $ 50,000 $ (21,250 ) $ 28,750 Trade names, trademarks product names, URLs 1,555,000 (777,104 ) 777,896 1,555,000 (585,479 ) 969,521 Internally developed software 2,720,000 (2,202,697 ) 517,303 2,720,000 (1,900,696 ) 819,304 Subscriber/customer relationships 4,219,000 (2,884,195 ) 1,334,805 4,219,000 (2,221,882 ) 1,997,118 Lead pool 282,000 (282,000 ) - 282,000 (176,250 ) 105,750 Total intangible assets $ 8,826,000 $ (6,169,121 ) $ 2,656,879 $ 8,826,000 $ (4,905,557 ) $ 3,920,443 Amortization expense for the three and nine months ended September 30, 2018 was $421,188 and $1,263,564, respectively, as compared to $421,188 and $1,263,563, respectively, for the three and nine months ended September 30, 2017. The estimated aggregate amortization expense for the last quarter of 2018 and each of the next four years and thereafter will be $336,155 in 2018, $1,087,333 in 2019, $592,681 in 2020, $444,167 in 2021 and $196,543 in 2022. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [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, 2018 and December 31, 2017: September 30, December 31, 2018 2017 (unaudited) Compensation, benefits and payroll taxes $ 388,500 $ 310,775 Other accrued expenses 382,645 94,871 Total accrued expenses and other current liabilities $ 771,145 $ 405,646 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes The Company’s provision for income taxes consists principally of state and local taxes in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. For the three and nine months ended September 30, 2018, the Company recorded an income tax benefit of $13,636 and an income tax expense of $1,864, respectively. The effective tax rate for the three and nine months ended September 30, 2018 was 2.34% and (0.06%), respectively. The effective tax rate differs from the statutory rate of 21% as no benefit has been provided to current year pre-tax losses as the Company concluded its deferred tax assets are not realizable on a more-likely-than-not basis. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity The PeerStream, 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 PeerStream, 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. The maximum number of shares of common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000 shares, 100% of which may be issued pursuant to incentive stock options. 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, 2018, there were 408,508 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 period: Nine Months September 30, 2018 Expected volatility 159.0-167.0 % Expected life of option (years) 5.2-6.3 Risk free interest rate 2.3-2.9 % Expected dividend yield 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 the options has been determined using the “simplified” method, 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, 2018: Weighted Number of Average Options Price Stock Options: Outstanding at January 1, 2018 980,588 $ 5.02 Granted 120,130 5.95 Exercised, during period (6,363 ) 4.43 Expired or canceled, during the period (1,429 ) 42.35 Forfeited, during the period (25,399 ) 4.45 Outstanding at September 30, 2018 1,067,527 $ 5.10 Exercisable at September 30, 2018 559,232 $ 6.05 On September 30, 2018, the aggregate intrinsic value of stock options that were outstanding and exercisable was $1,752,348 and $825,048, respectively. On September 30, 2017, the aggregate intrinsic value of stock options that were outstanding and exercisable was $17,565 and $9,972, 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. During the nine months ended September 30, 2018, the Company granted options to employees to purchase an aggregate 120,130 shares of common stock at exercise prices ranging from $5.10 to $6.99. The options vest between one, three and four years and have a term of ten years. The aggregate fair value for the options granted during the nine months ended September 30, 2018 was $708,501. The aggregate fair value for the options granted during the nine months ended September 30, 2017 was $966,560. 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, 2018 2017 2018 2017 Cost of revenue $ 529 $ 333 $ 1,870 $ 3,279 Sales and marketing expense 981 1,039 3,202 908 Product development expense 14,380 3,396 33,640 36,628 General and administrative expense 211,818 148,714 610,848 436,206 Total stock compensation expense $ 227,708 $ 153,482 $ 649,560 $ 477,021 At September 30, 2018, there was $1,625,919 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 2.1 years. Restricted Stock Awards The following table summarizes restricted stock award activity for the nine months ended September 30, 2018: Weighted Average Number of Grant Date RSAs Fair Value Restricted Stock Awards: Unvested at January 1, 2018 158,571 $ 20.29 Granted - - Expired or canceled, during the period - - Forfeited, during the period - - Unvested at September 30, 2018 158,571 $ 20.29 At September 30, 2018, there was $741,496 of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 1.0 years. Stock-based compensation expense relating to restricted stock awards for the three and nine months ended September 30, 2018 was $185,374 and $556,122, respectively, as compared to $185,374 and $556,122, respectively, for the three and nine months ended September 30, 2017. Lerner Restricted Stock Award Agreements On June 15, 2018, in connection with Clifford Lerner’s resignation as an officer and employee of the Company, the Company entered into amendments to (i) a restricted stock award agreement, dated March 3, 2016, as amended, related to the original award of 142,858 shares of restricted common stock to Mr. Lerner and (ii) a restricted stock award agreement, dated December 14, 2011, as amended, related to the original award of 121,429 shares of restricted common stock to Mr. Lerner (together, the “Restricted Stock Award Amendments”). On October 7, 2018, 79,285 shares of Mr. Lerner’s restricted stock vested. Pursuant to the Restricted Stock Award Amendments, the Company was required, in order to assist Mr. Lerner in satisfying his tax withholding obligations with respect to the vesting restricted shares, to withhold 20,000 shares of vesting restricted common stock. The remaining amount of the tax withholding obligation was paid by Mr. Lerner and Mr. Lerner’s unvested shares of restricted common stock will continue to vest as scheduled. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 9. Net Loss 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 nine months ended September 30, 2018, 1,067,527 shares upon the exercise of outstanding stock options and 158,571 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 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. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 10. Commitments Operating Lease Agreements On January 18, 2016, the Company entered into a lease agreement for office space located at 122 East 42nd Street in New York, NY and paid a security deposit in the amount of $37,000. The term of the lease runs until May 30, 2019. The Company’s monthly office rent payments under the lease are currently approximately $12,300 per month and escalate on an annual basis for each year of the term of the lease thereafter. On June 7, 2016, the Company entered into a lease agreement with Jericho Executive Center LLC for office space at 30 Jericho Executive Plaza in Jericho, New York which commenced on September 1, 2017 and runs through November 30, 2021. The Company’s monthly office rent payments under the lease are currently approximately $5,900 per month. On September 18, 2017, the Company entered into a lease agreement for a second office space located at 122 East 42nd Street in New York, NY and paid a security deposit in the amount of $8,000. The term of the lease runs until July 31, 2019. The Company’s monthly office rent payments under the lease are currently approximately $4,000 per month. On October 27, 2017, the Company entered into a lease agreement for an office space located at Sparks-Ledesma House 1306 East 7th Street in Austin, TX that expires on October 31, 2018. The Company’s monthly office rent payments under the lease are currently approximately $1,129 per month. Legal Proceedings On December 16, 2016, a wholly owned subsidiary of the Company, Paltalk Holdings, Inc., filed a patent infringement lawsuit in Delaware against Riot Games, Inc. and Valve Corporation for infringement of U.S. Patent Nos. 5,822,523 and 6,226,686 with respect to their online games League of Legends and Defense of the Ancients 2. These two patents were previously asserted against, and then licensed to, Microsoft, Sony, and Activision. In 2018, Valve Corporation moved to transfer the litigation from Delaware to the Western District of Washington. Such motion was granted by the court. Riot Games, Inc. has filed a total of four inter partes The Company may be included 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, 2018. |
ProximaX Agreement
ProximaX Agreement | 9 Months Ended |
Sep. 30, 2018 | |
ProximaX Agreement [Abstract] | |
ProximaX Agreement | 11. ProximaX Agreement On March 21, 2018, as a first step in providing services through PeerStream Business Solutions, the Company entered into a technology services agreement with ProximaX whereby the Company agreed to provide certain development and related services to ProximaX to facilitate the implementation of PSP into ProximaX’s proprietary blockchain protocol that is currently under development. Pursuant to the terms of the agreement, ProximaX agreed to pay the Company up to an aggregate of $10.0 million either in cash or in certain highly liquid cryptocurrencies in exchange for the Company’s services, with $5.0 million due upon the successful consummation of a future initial coin offering by ProximaX and up to an additional $5.0 million due upon the Company’s achievement of certain development milestones set forth in the agreement. In addition, ProximaX agreed to issue the Company a number of tokens equal to 2.4% of all outstanding tokens on the date of the planned initial coin offering and to reserve an additional 2% of such tokens to be issued as payment for future services provided by the Company, subject, in each case, to such initial coin offering generating aggregate gross proceeds of at least $30.0 million. On April 30, 2018, ProximaX closed its initial coin offering, which generated aggregate gross proceeds in excess of $30.0 million for purposes of the technology services agreement. On May 6, 2018, as agreed under the terms of the technology services agreement, ProximaX paid the Company the $5.0 million fee due upon consummation of its initial coin offering in Ethereum, which the Company immediately converted into cash. The Company recorded approximately $113.0 thousand in transaction and conversion fees for the three months ended June 30, 2018 associated with the conversion of Ethereum into U.S. dollars. On June 2, 2018, the Company received 216.0 million XPX tokens from ProximaX, representing 2.4% of the XPX tokens issued by ProximaX in its initial coin offering, generating contract revenue of approximately $3.4 million. XPX tokens began trading on the Kryptono Exchange on June 2, 2018 and the quoted market price of $0.01559 was used to determine the initial fair value of tokens. As of September 30, 2018 at approximately 5:00 PM, Eastern Time, during the impairment period, XPX tokens were trading at a price equal to $0.00386 per token, and our 216.0 million XPX tokens had an aggregate fair value of approximately $0.8 million. The fair value change of the digital tokens of $2,535,235 was reflected as impairment loss on digital tokens in the statement of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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 stock options issued in share based payment arrangements, collectability of the Company’s accounts receivable, revenue recognition under time based service contracts 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) In June 2018, the FASB issued an ASU to simplify several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of Topic 718, Compensation—Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. The amendments in this ASU are effective for the Company on January 1, 2019. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements. |
Revenue | Revenue In accordance with ASC 606, revenue from contracts with customers is recognized when control of the promised services is transferred to our customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Sales tax is excluded from reported revenue. Subscription Revenue The Company generates subscription revenue primarily from monthly premium subscription services. Subscription revenues are presented net of refunds, credits, and known and estimated credit card chargebacks. Subscriptions are generally offered in durations of one-, three-, six- and twelve- month terms. All subscription fees, however, are paid by credit card at the origination of the subscription regardless of the term of the subscription, therefore determining the fixed transaction price. Revenues from multi-month subscriptions are recognized on a straight-line basis over the period where the service is offered to our customer, indicated by length of the subscription term purchased. The unearned portion of subscription revenue is presented as deferred revenue in the accompanying condensed consolidated balance sheets. The deferred revenue at December 31, 2017 was $2,553,826, of which approximately $1,925,104 was subsequently recognized as subscription revenue during the nine months ended September 30, 2018. The ending balance of deferred revenue at September 30, 2018 was $2,173,290. In addition, the Company offers virtual gifts and micro-transactions to its users. Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items. These gifts are given among users to enhance communication and are typically redeemed within the month of purchase. Upon purchase, the virtual gifts are credited to the users’ account and is under the users’ control. Virtual gift and micro-transaction revenue are recognized upon the users’ utilization of the virtual gift at the fixed transaction price on a gross basis and included in subscription revenue in the accompanying condensed consolidated statements of operations. Virtual gift and micro-transaction revenue was approximately $1,883,582 and $5,636,505 for the three and nine months ended September 30, 2018, respectively. Advertising Revenue The Company generates advertising revenue from the display of advertisements on its products through contractual agreements with third parties that are based on the number of advertising impressions delivered. When a customer clicks an advertisement (CPC basis), views an advertisement impression (CPM basis), or registers for an external website via an advertisement by clicking on or through the application (CPA basis), the amount earned is recognized as revenue. Revenue related to fixed fee arrangements is recognized ratably over the service period. In determining whether an arrangement exists, the Company ensures that an agreement has been fully executed. Advertising revenue is dependent upon traffic as well as the advertising inventory placed on the Company’s products. Technology Service Revenue Revenue related to the technology services agreement with ProximaX Limited (“ProximaX”), which is a fixed-price contract, is recognized as the services are performed and payment is earned. The Company accounts for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. Accordingly, revenue under the technology services agreement with ProximaX is recognized based upon proportional performance using labor hours as the unit of measurement. The contractual upfront fee included $5.0 million and was paid in the Ethereum cryptocurrency and subsequently converted into U.S. dollars. The upfront fee also included 216.0 million tokens related to our familiarization with the client’s technology and the build-out of a roadmap used to fulfill the contract. The total upfront fee is recognized as revenue under the input method based on proportional performance using labor hours as the unit of measurement. The unearned portion is presented as deferred technology service revenue in the accompanying condensed consolidated balance sheets. Revisions to the Company’s estimates may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified. If the Company’s estimates indicate that a contract loss will be incurred, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated costs of the contract exceed the estimated total revenues that will be generated by the contract and are included in cost of revenues in the Company’s condensed consolidated statement of operations. There were no contract losses for the periods presented. The remaining $5.0 million in payments under the technology services agreement will be recognized as revenue upon the Company’s fulfillment of contractually defined milestones. |
Digital Tokens | Digital Tokens Digital tokens consist of XPX tokens received in connection with the technology services agreement with ProximaX. Given that there is limited precedent regarding the classification and measurement of cryptocurrencies and other digital tokens under current GAAP, the Company has determined to account for these tokens as indefinite-lived intangible assets in accordance with ASC 350: Intangibles—Goodwill and Other for the period covered by this report and in future reports unless and until further guidance is issued by the FASB. Indefinite-lived intangible assets are recorded at cost and are not subject to amortization, but shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If, at the time of an impairment test, the carrying amount of an intangible asset exceeds its fair value, an impairment loss in an amount equal to the excess is recognized. Fair value of the digital tokens is based on the quoted market prices on the Kryptono Exchange. The Company recorded an impairment charge in the amount of $575,831 and $2,535,235, which is reported as a component of other income and expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2018, respectively. The Company previously accounted for these tokens as financial assets under ASC 825: Financial Instruments for the quarter ended June 30, 2018. Management performed the review required by Staff Accounting Bulletins (“SAB”) 108 and SAB 99 on the error and determined the error had no material impact on the financial statements of the Company as of and for the period ended June 30, 2018. The amount of the charge has not changed as a result of the correction. The description of the account has changed from “Changes in fair value of digital tokens” to “Impairment loss on digital tokens” on the statements of operations and cash flows. In addition, the error did not have an effect on the net loss from operations, net loss and related net loss per share for any of the prior 2018 interim periods. Since the previously-issued financial statements are not materially misstated, the error is corrected prospectively. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of cash and investments by significant investment category | Adjusted Cost Change in Fair Value Fair Value Cash and Cash Equivalents Cash $ 649,074 $ - $ 649,074 $ 649,074 Level 1: Money market funds 302,663 - 302,663 302,663 U.S. Treasury securities 6,265,617 - 6,265,617 6,265,617 Subtotal 6,568,280 - 6,568,280 6,568,280 Total $ 7,217,354 $ - $ 7,217,354 $ 7,217,354 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | September 30, December 31, (unaudited) Computer equipment $ 3,706,017 $ 3,706,017 Website development 2,591,463 2,342,442 Furniture and fixtures 89,027 89,027 Leasehold improvements 32,726 32,726 Total property and equipment 6,419,233 6,170,212 Less: Accumulated depreciation (5,839,714 ) (5,547,500 ) Total property and equipment, net $ 579,519 $ 622,712 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets, net | September 30, December 31, 2018 2017 (unaudited) Gross Accumulated Net Gross Accumulated Net Patents $ 50,000 $ (23,125 ) $ 26,875 $ 50,000 $ (21,250 ) $ 28,750 Trade names, trademarks product names, URLs 1,555,000 (777,104 ) 777,896 1,555,000 (585,479 ) 969,521 Internally developed software 2,720,000 (2,202,697 ) 517,303 2,720,000 (1,900,696 ) 819,304 Subscriber/customer relationships 4,219,000 (2,884,195 ) 1,334,805 4,219,000 (2,221,882 ) 1,997,118 Lead pool 282,000 (282,000 ) - 282,000 (176,250 ) 105,750 Total intangible assets $ 8,826,000 $ (6,169,121 ) $ 2,656,879 $ 8,826,000 $ (4,905,557 ) $ 3,920,443 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | September 30, December 31, 2018 2017 (unaudited) Compensation, benefits and payroll taxes $ 388,500 $ 310,775 Other accrued expenses 382,645 94,871 Total accrued expenses and other current liabilities $ 771,145 $ 405,646 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of assumptions used in Black-Scholes pricing model to estimate the fair value of the options granted | Nine Months September 30, 2018 Expected volatility 159.0-167.0 % Expected life of option (years) 5.2-6.3 Risk free interest rate 2.3-2.9 % Expected dividend yield 0.0 % |
Schedule of stock option activity | Weighted Number of Average Options Price Stock Options: Outstanding at January 1, 2018 980,588 $ 5.02 Granted 120,130 5.95 Exercised, during period (6,363 ) 4.43 Expired or canceled, during the period (1,429 ) 42.35 Forfeited, during the period (25,399 ) 4.45 Outstanding at September 30, 2018 1,067,527 $ 5.10 Exercisable at September 30, 2018 559,232 $ 6.05 |
Schedule of stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Cost of revenue $ 529 $ 333 $ 1,870 $ 3,279 Sales and marketing expense 981 1,039 3,202 908 Product development expense 14,380 3,396 33,640 36,628 General and administrative expense 211,818 148,714 610,848 436,206 Total stock compensation expense $ 227,708 $ 153,482 $ 649,560 $ 477,021 |
Schedule of restricted stock award activity | Weighted Average Number of Grant Date RSAs Fair Value Restricted Stock Awards: Unvested at January 1, 2018 158,571 $ 20.29 Granted - - Expired or canceled, during the period - - Forfeited, during the period - - Unvested at September 30, 2018 158,571 $ 20.29 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies (Textual) | |||||
Deferred revenue | $ 2,173,290 | $ 2,173,290 | $ 2,553,826 | ||
Subscription revenue | 4,906,640 | $ 5,447,119 | $ 15,317,865 | $ 17,413,511 | |
Purchase credits, description | Users may purchase credits in $5, $10 or $20 increments that can be redeemed for a host of virtual gifts such as a rose, a beer or a car, among other items. | ||||
Virtual gift and micro-transaction revenue | 1,883,582 | $ 5,636,505 | |||
Contractual upfront fee | 5,000,000 | ||||
Upfront fee of tokens | 216,000,000 | ||||
Remaining payment revenue | 5,000,000 | 5,000,000 | |||
Impairment loss on digital tokens | $ 575,831 | 2,535,235 | |||
Subscription Revenue [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Subscription revenue | $ 1,925,104 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Cash, Adjusted Cost | $ 649,074 |
Cash, Change in Fair Value | |
Cash, Fair Value | 649,074 |
Cash, Cash and Cash Equivalents | 649,074 |
Adjusted Cost | 7,217,354 |
Change in Fair Value | |
Fair Value | 7,217,354 |
Cash and Cash Equivalents | 7,217,354 |
Level 1 [Member] | |
Adjusted Cost | 6,568,280 |
Change in Fair Value | |
Fair Value | 6,568,280 |
Cash and Cash Equivalents | 6,568,280 |
Money market funds [Member] | Level 1 [Member] | |
Adjusted Cost | 302,663 |
Change in Fair Value | |
Fair Value | 302,663 |
Cash and Cash Equivalents | 302,663 |
U.S. Treasury securities [Member] | Level 1 [Member] | |
Adjusted Cost | 6,265,617 |
Change in Fair Value | |
Fair Value | 6,265,617 |
Cash and Cash Equivalents | $ 6,265,617 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 6,419,233 | $ 6,170,212 |
Less: Accumulated depreciation | (5,839,714) | (5,547,500) |
Total property and equipment, net | 579,519 | 622,712 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 3,706,017 | 3,706,017 |
Website development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,591,463 | 2,342,442 |
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 (_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 | $ 86,076 | $ 101,801 | $ 292,214 | $ 355,348 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 8,826,000 | $ 8,826,000 |
Accumulated Amortization | (6,169,121) | (4,905,557) |
Net Carrying Amount | 2,656,879 | 3,920,443 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 50,000 | 50,000 |
Accumulated Amortization | (23,125) | (21,250) |
Net Carrying Amount | 26,875 | 28,750 |
Trade names, trademarks product names, URLs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,555,000 | 1,555,000 |
Accumulated Amortization | (777,104) | (585,479) |
Net Carrying Amount | 777,896 | 969,521 |
Internally developed software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,720,000 | 2,720,000 |
Accumulated Amortization | (2,202,697) | (1,900,696) |
Net Carrying Amount | 517,303 | 819,304 |
Subscriber/customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,219,000 | 4,219,000 |
Accumulated Amortization | (2,884,195) | (2,221,882) |
Net Carrying Amount | 1,334,805 | 1,997,118 |
Lead pool [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 282,000 | 282,000 |
Accumulated Amortization | (282,000) | (176,250) |
Net Carrying Amount | $ 105,750 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Intangible Assets, Net (Textual) | ||||
Amortization expense | $ 421,188 | $ 421,188 | $ 1,263,564 | $ 1,263,563 |
Estimated aggregate amortization expense for 2018 | 336,155 | 336,155 | ||
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 | $ 196,543 | $ 196,543 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Compensation, benefits and payroll taxes | $ 388,500 | $ 310,775 |
Other accrued expenses | 382,645 | 94,871 |
Total accrued expenses and other current liabilities | $ 771,145 | $ 405,646 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes (Textual) | ||||
Income tax provision | $ 13,636 | $ (1,864) | ||
Effective tax rate | 2.34% | 0.06% | ||
Statutory rate | 21.00% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Stock Option [Member] | 9 Months Ended |
Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 159.00% |
Expected life of option | 5 years 2 months 12 days |
Risk free interest rate | 2.30% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 167.00% |
Expected life of option | 6 years 3 months 19 days |
Risk free interest rate | 2.90% |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - Stock Option [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Stock Options: | |
Number of Options, Outstanding beginning balance | shares | 980,588 |
Number of Options, Granted | shares | 120,130 |
Number of Options, Exercised | shares | (6,363) |
Number of Options, Expired or canceled, during the period | shares | (1,429) |
Number of Options, Forfeited, during the period | shares | (25,399) |
Number of Options, Outstanding ending balance | shares | 1,067,527 |
Number of Options, Exercisable | shares | 559,232 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 5.02 |
Weighted Average Exercise Price, Granted | $ / shares | 5.95 |
Weighted Average Exercise Price, Exercised | $ / shares | 4.43 |
Weighted Average Exercise Price, Expired or canceled, during the period | $ / shares | 42.35 |
Weighted Average Exercise Price, Forfeited, during the period | $ / shares | 4.45 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | 5.10 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 6.05 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | $ 1,205,682 | $ 1,033,143 | ||
Cost of revenue [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | $ 529 | $ 333 | 1,870 | 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 | 981 | 1,039 | 3,202 | 908 |
Product development expense [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | 14,380 | 3,396 | 33,640 | 36,628 |
General and administrative expense [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | 211,818 | 148,714 | 610,848 | 436,206 |
Total stock compensation expense [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Stock-based compensation expense | $ 227,708 | $ 153,482 | $ 649,560 | $ 477,021 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Restricted Stock Awards: | |
Number of RSAs, Unvested beginning balance | shares | 158,571 |
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, Unvested ending balance | shares | 158,571 |
Weighted Average Grant Date Fair Value, Unvested 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, Unvested ending balance | $ / shares | $ 20.29 |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | Jun. 15, 2018 | May 16, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Stockholders' Equity (Textual) | ||||||
Stock-based compensation expense | $ 1,205,682 | $ 1,033,143 | ||||
Agreements amendments, description | <font style="font: 10pt Times New Roman, Times, Serif">(i) a restricted stock award agreement, dated March 3, 2016, as amended, related to the original award of 142,858 shares of restricted common stock to Mr. Lerner and (ii) a restricted stock award agreement, dated December 14, 2011, as amended, related to the original award of 121,429 shares of restricted common stock to Mr. Lerner (together, the “Restricted Stock Award Amendments”).</font></p>" id="sjs-B4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(i) a restricted stock award agreement, dated March 3, 2016, as amended, related to the original award of 142,858 shares of restricted common stock to Mr. Lerner and (ii) a restricted stock award agreement, dated December 14, 2011, as amended, related to the original award of 121,429 shares of restricted common stock to Mr. Lerner (together, the “Restricted Stock Award Amendments”).</font></p> | |||||
Restricted Stock [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Total unrecognized compensation expense | $ 741,496 | $ 741,496 | ||||
Weighted average expected recognition period of unrecognized compensation expense | 1 year | |||||
Stock-based compensation expense | 185,374 | $ 185,374 | $ 556,122 | 556,122 | ||
Stock Option [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Aggregate fair value of options granted | 708,501 | 966,560 | ||||
Total unrecognized compensation expense | 1,625,919 | $ 1,625,919 | ||||
Weighted average expected recognition period of unrecognized compensation expense | 2 years 1 month 6 days | |||||
Stock option transaction, description | The options vest between one, three and four years and have a term of ten years. | |||||
Aggregate purchase of common stock, shares | 120,130 | |||||
Aggregate intrinsic value of stock options, outstanding | 1,752,348 | 17,565 | $ 1,752,348 | 17,565 | ||
Aggregate intrinsic value of stock options, exercisable | $ 825,048 | $ 9,972 | $ 825,048 | $ 9,972 | ||
Stock Option [Member] | Maximum [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Stock options, exercise price | $ 6.99 | |||||
Stock Option [Member] | Minimum [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Stock options, exercise price | $ 5.10 | |||||
Stock Compensation Plan One [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Number of shares issued under plan | 181,604 | |||||
Stock Compensation Plan [Member] | ||||||
Stockholders' Equity (Textual) | ||||||
Number of shares issued under plan | 1,300,000 | |||||
Percentage of common stock delivered pursuant to incentive stock options | 100.00% | |||||
Number of stock available for future issuance | 408,508 | 408,508 | ||||
Terminated date of future awards | May 16, 2016 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net Loss Per Share (Textual) | |||
Shares upon the exercise of outstanding stock options | 817,020 | 1,067,527 | 817,020 |
Unvested restricted stock | 264,286 | 158,571 | 264,286 |
Commitments (Details)
Commitments (Details) - USD ($) | Jun. 07, 2016 | Oct. 27, 2017 | Sep. 18, 2017 | Jan. 18, 2016 |
Commitments (Textual) | ||||
Monthly rent payment | $ 5,900 | $ 1,129 | $ 4,000 | $ 12,300 |
Security deposit | $ 8,000 | $ 37,000 | ||
Operating lease, description | The term of the lease runs until July 31, 2019. | The term of the lease runs until May 30, 2019. | ||
Expires date | Oct. 31, 2018 |
ProximaX Agreement (Details)
ProximaX Agreement (Details) - USD ($) | Jun. 02, 2018 | Apr. 30, 2018 | Mar. 21, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
ProximaX Agreement (Textual) | |||||||
Business technology services agreement, description | The Company received 216.0 million XPX tokens from ProximaX, representing 2.4% of the XPX tokens issued by ProximaX in its initial coin offering, generating contract revenue of approximately $3.4 million. XPX tokens began trading on the Kryptono Exchange on June 2, 2018 and the quoted market price of $0.01559 was used to determine the initial fair value of tokens. As of September 30, 2018 at approximately 5:00 PM, Eastern Time, during the impairment period, XPX tokens were trading at a price equal to $0.00652 per token, and our 216.0 million XPX tokens had an aggregate fair value of approximately $1.4 million.</p>" id="sjs-B3"><p style="margin: 0pt">The Company received 216.0 million XPX tokens from ProximaX, representing 2.4% of the XPX tokens issued by ProximaX in its initial coin offering, generating contract revenue of approximately $3.4 million. XPX tokens began trading on the Kryptono Exchange on June 2, 2018 and the quoted market price of $0.01559 was used to determine the initial fair value of tokens. As of September 30, 2018 at approximately 5:00 PM, Eastern Time, during the impairment period, XPX tokens were trading at a price equal to $0.00652 per token, and our 216.0 million XPX tokens had an aggregate fair value of approximately $1.4 million.</p> | Pursuant to the terms of the agreement, ProximaX agreed to pay the Company up to an aggregate of $10.0 million either in cash or in certain highly liquid cryptocurrencies in exchange for the Company’s services, with $5.0 million due upon the successful consummation of a future initial coin offering by ProximaX and up to an additional $5.0 million due upon the Company’s achievement of certain development milestones set forth in the agreement. In addition, ProximaX agreed to issue the Company a number of tokens equal to 2.4% of all outstanding tokens on the date of the planned initial coin offering and to reserve an additional 2% of such tokens to be issued as payment for future services provided by the Company, subject, in each case, to such initial coin offering generating aggregate gross proceeds of at least $30.0 million.</p>" id="sjs-D3"><p style="margin: 0pt">Pursuant to the terms of the agreement, ProximaX agreed to pay the Company up to an aggregate of $10.0 million either in cash or in certain highly liquid cryptocurrencies in exchange for the Company’s services, with $5.0 million due upon the successful consummation of a future initial coin offering by ProximaX and up to an additional $5.0 million due upon the Company’s achievement of certain development milestones set forth in the agreement. In addition, ProximaX agreed to issue the Company a number of tokens equal to 2.4% of all outstanding tokens on the date of the planned initial coin offering and to reserve an additional 2% of such tokens to be issued as payment for future services provided by the Company, subject, in each case, to such initial coin offering generating aggregate gross proceeds of at least $30.0 million.</p> | |||||
Initial coin offering, description | ProximaX closed its initial coin offering, which generated aggregate gross proceeds in excess of $30.0 million for purposes of the Company’s technology services agreement with ProximaX. On May 6, 2018, as agreed under the terms of the technology services agreement, ProximaX paid the Company the $5.0 million fee due upon consummation of its initial coin offering in Ethereum, which the Company immediately converted into cash. | ||||||
Transaction and conversion fees | $ 113,000 | ||||||
Fair value change of the digital tokens | $ 575,831 | $ 2,535,235 |