Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | AUDIOEYE INC | |
Entity Central Index Key | 0001362190 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | AEYE | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,876,555 | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 3,463,899 | $ 5,741,549 |
Accounts receivable, net | 1,362,400 | 172,384 |
Marketable securities, held in related party | 762 | 510 |
Deferred costs, short term | 197,961 | 176,006 |
Prepaid expenses and other current assets | 366,370 | 49,901 |
Total current assets | 5,391,392 | 6,140,350 |
Property and equipment, net | 167,805 | 108,007 |
Right of use assets | 877,067 | 0 |
Deferred costs, long term | 156,786 | 93,790 |
Intangible assets, net | 1,711,650 | 2,061,404 |
Goodwill | 700,528 | 700,528 |
Total assets | 9,005,228 | 9,104,079 |
Current liabilities: | ||
Accounts payable and accrued expenses | 670,129 | 93,544 |
Related party payables | 4,541 | 14,467 |
Finance lease liabilities | 51,735 | 30,172 |
Operating lease liabilities | 204,411 | 0 |
Deferred rent | 4,472 | |
Deferred revenue | 4,119,567 | 2,626,712 |
Total current liabilities | 5,050,383 | 2,769,367 |
Long term liabilities: | ||
Finance lease liabilities | 61,886 | 51,150 |
Operating lease liabilities | 709,268 | 0 |
Deferred rent | 6,585 | |
Deferred revenue | 192,121 | 402,075 |
Total liabilities | 6,013,658 | 3,229,177 |
Stockholders' equity: | ||
Preferred stock, value | ||
Common stock, $0.00001 par value, 50,000,000 shares authorized, 8,876,555 and 7,579,995 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 89 | 76 |
Additional paid-in capital | 51,491,258 | 48,017,926 |
Accumulated deficit | (48,499,778) | (42,143,101) |
Total stockholders' equity | 2,991,570 | 5,874,902 |
Total liabilities and stockholders' equity | 9,005,228 | 9,104,079 |
Series A Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, value | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 8,876,555 | 7,579,995 |
Common Stock, Shares, Outstanding | 8,876,555 | 7,579,995 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 200,000 | 200,000 |
Preferred Stock, Shares Issued | 105,000 | 105,000 |
Preferred Stock, Shares Outstanding | 105,000 | 105,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 2,776,436 | $ 1,494,313 | $ 7,197,736 | $ 3,878,552 |
Cost of revenue | 1,121,307 | 672,589 | 3,171,715 | 1,882,698 |
Gross profit | 1,655,129 | 821,724 | 4,026,021 | 1,995,854 |
Operating expenses: | ||||
Selling and marketing | 1,424,210 | 625,789 | 3,389,912 | 1,813,345 |
Research and development | 139,570 | 48,860 | 501,400 | 147,889 |
General and administrative | 2,249,302 | 1,445,539 | 6,452,315 | 3,592,004 |
Total operating expenses | 3,813,082 | 2,120,188 | 10,343,627 | 5,553,238 |
Operating loss | (2,157,953) | (1,298,464) | (6,317,606) | (3,557,384) |
Other income (expense): | ||||
Unrealized gain (loss) on marketable securities | 456 | (1,680) | 252 | (30) |
Interest (expense) income, net | (37,746) | (32,892) | (39,323) | (32,760) |
Total other (loss) income | (37,290) | (34,572) | (39,071) | (32,790) |
Net loss | (2,195,243) | (1,333,036) | (6,356,677) | (3,590,174) |
Dividends on Series A convertible preferred stock | (13,233) | (13,233) | (39,267) | (40,507) |
Net loss available to common stockholders | $ (2,208,476) | $ (1,346,269) | $ (6,395,944) | $ (3,630,681) |
Net loss per common share-basic and diluted | $ (0.27) | $ (0.19) | $ (0.81) | $ (0.54) |
Weighted average common shares outstanding-basic and diluted | 8,279,207 | 7,084,716 | 7,847,905 | 6,676,968 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 65 | $ 1 | $ 40,121,845 | $ (39,425,900) | $ 696,011 |
Balance (in shares) at Dec. 31, 2017 | 6,467,066 | 110,000 | |||
Restricted stock units, warrants and options issued for services | 367,303 | 367,303 | |||
Net loss | (1,162,611) | (1,162,611) | |||
Balance at Mar. 31, 2018 | $ 65 | $ 1 | 41,250,638 | (38,285,838) | 2,964,866 |
Balance (in shares) at Mar. 31, 2018 | 6,467,066 | 110,000 | |||
Balance at Dec. 31, 2017 | $ 65 | $ 1 | 40,121,845 | (39,425,900) | 696,011 |
Balance (in shares) at Dec. 31, 2017 | 6,467,066 | 110,000 | |||
Net loss | (3,590,174) | ||||
Balance at Sep. 30, 2018 | $ 75 | $ 1 | 47,322,983 | (40,713,401) | 6,609,658 |
Balance (in shares) at Sep. 30, 2018 | 7,488,281 | 105,000 | |||
Adoption of ASU | Accounting Standards Update 2014-09 [Member] | 80,153 | 80,153 | |||
Adoption of ASU | Accounting Standards Update 2017-11 [Member] | 761,490 | 2,222,520 | 2,984,010 | ||
Balance at Mar. 31, 2018 | $ 65 | $ 1 | 41,250,638 | (38,285,838) | 2,964,866 |
Balance (in shares) at Mar. 31, 2018 | 6,467,066 | 110,000 | |||
Common stock issued upon conversion of preferred stock (in Shares) | 13,204 | (5,000) | |||
Common stock issued in exchange for exercise of warrants and options on a cashless basis (in shares) | 8,011 | ||||
Restricted stock units, warrants and options issued for services | 270,722 | 270,722 | |||
Net loss | (1,094,527) | (1,094,527) | |||
Balance at Jun. 30, 2018 | $ 65 | $ 1 | 41,521,360 | (39,380,365) | 2,141,061 |
Balance (in shares) at Jun. 30, 2018 | 6,488,281 | 105,000 | |||
Common stock and warrants sold for cash | $ 10 | 5,609,205 | 5,609,215 | ||
Common stock and warrants sold for cash (in shares) | 1,000,000 | ||||
Beneficial conversion feature and warrants issued with convertible notes | 100,000 | 100,000 | |||
Restricted stock units, warrants and options issued for services | 92,418 | 92,418 | |||
Net loss | (1,333,036) | (1,333,036) | |||
Balance at Sep. 30, 2018 | $ 75 | $ 1 | 47,322,983 | (40,713,401) | 6,609,658 |
Balance (in shares) at Sep. 30, 2018 | 7,488,281 | 105,000 | |||
Adoption of ASU | Accounting Standards Update 2014-09 [Member] | 80,153 | ||||
Balance at Dec. 31, 2018 | $ 76 | $ 1 | 48,017,926 | (42,143,101) | 5,874,902 |
Balance (in shares) at Dec. 31, 2018 | 7,579,995 | 105,000 | |||
Common stock issued in exchange for exercise of options and warrants | 42,450 | 42,450 | |||
Common stock issued in exchange for exercise of options and warrants (in Shares) | 43,232 | ||||
Restricted stock units, warrants and options issued for services | 448,900 | 448,900 | |||
Net loss | (2,141,426) | (2,141,426) | |||
Balance at Mar. 31, 2019 | $ 76 | $ 1 | 48,509,276 | (44,284,527) | 4,224,826 |
Balance (in shares) at Mar. 31, 2019 | 7,623,227 | 105,000 | |||
Balance at Dec. 31, 2018 | $ 76 | $ 1 | 48,017,926 | (42,143,101) | 5,874,902 |
Balance (in shares) at Dec. 31, 2018 | 7,579,995 | 105,000 | |||
Net loss | (6,356,677) | ||||
Balance at Sep. 30, 2019 | $ 89 | $ 1 | 51,491,258 | (48,499,778) | 2,991,570 |
Balance (in shares) at Sep. 30, 2019 | 8,876,555 | 105,000 | |||
Balance at Mar. 31, 2019 | $ 76 | $ 1 | 48,509,276 | (44,284,527) | 4,224,826 |
Balance (in shares) at Mar. 31, 2019 | 7,623,227 | 105,000 | |||
Common stock issued in exchange for exercise of options and warrants | $ 1 | 99,273 | 99,274 | ||
Common stock issued in exchange for exercise of options and warrants (in Shares) | 32,819 | ||||
Restricted stock units, warrants and options issued for services | 275,253 | 275,253 | |||
Net loss | (2,020,008) | (2,020,008) | |||
Balance at Jun. 30, 2019 | $ 77 | $ 1 | 48,883,802 | (46,304,535) | 2,579,345 |
Balance (in shares) at Jun. 30, 2019 | 7,656,046 | 105,000 | |||
Common stock issued in exchange for exercise of options and warrants | $ 12 | 2,114,906 | 2,114,918 | ||
Common stock issued in exchange for exercise of options and warrants (in Shares) | 1,220,509 | ||||
Warrants issued in connection with line of credit | 219,335 | 219,335 | |||
Restricted stock units, warrants and options issued for services | 273,215 | 273,215 | |||
Net loss | (2,195,243) | (2,195,243) | |||
Balance at Sep. 30, 2019 | $ 89 | $ 1 | $ 51,491,258 | $ (48,499,778) | $ 2,991,570 |
Balance (in shares) at Sep. 30, 2019 | 8,876,555 | 105,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (6,356,677) | $ (3,590,174) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 534,484 | 394,238 |
Amortization of debt discounts | 36,556 | 32,430 |
Option, warrant, RSU and PSU expense | 997,368 | 730,443 |
Noncash operating lease expense | 163,710 | 0 |
Unrealized loss (gain) on marketable securities | (252) | 30 |
Amortization of deferred commission | 174,841 | 59,705 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,190,016) | (125,980) |
Deferred costs | (259,792) | (201,142) |
Other current assets | (133,690) | 40,419 |
Accounts payable and accruals | 576,585 | 155,128 |
Operating lease liabilities | (138,155) | (2,507) |
Deferred revenue | 1,282,901 | 1,264,919 |
Related party payables | (9,926) | (9,068) |
Net cash used in operating activities | (4,322,063) | (1,251,559) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | (45,803) | (10,893) |
Software development costs | (137,373) | (308,933) |
Net cash used in investing activities | (183,176) | (319,826) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of common stock for cash | 5,609,215 | |
Issuance of convertible note payable-related party | 50,000 | |
Issuance of convertible notes payable | 50,000 | |
Proceeds from exercise of warrants and options | 2,256,642 | 0 |
Repayments of notes payable and finance leases | (29,053) | (7,595) |
Net cash provided by financing activities | 2,227,589 | 5,701,620 |
Net (decrease) increase in cash | (2,277,650) | 4,130,235 |
Cash-beginning of period | 5,741,549 | 1,960,430 |
Cash-end of period | 3,463,899 | 6,090,665 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest paid | 4,326 | 1,327 |
Income taxes paid | 0 | |
Non cash investing and financing activities: | ||
Right-of-use assets and operating lease obligations recognized during the year | 483,565 | 0 |
Equipment acquired under finance leases | 61,352 | 77,864 |
Deferred costs originated from issuance of warrants in connection with line of credit | 219,335 | 0 |
Debt discount originated from issuance of warrant attached to notes payable | 100,000 | |
Reclassify fair value of warrant liabilities to equity upon adoption of ASU 2017-11 | 2,984,010 | |
Accounting Standards Update 2014-09 [Member] | ||
Changes in operating assets and liabilities: | ||
Deferred costs | (259,792) | (201,142) |
Non cash investing and financing activities: | ||
Adoption of ASU | 80,153 | |
Accounting Standards Update 2016-02 [Member] | ||
Non cash investing and financing activities: | ||
ROU assets and operating lease obligations recognized upon adoption of ASU 2016-02 | $ 568,268 | $ 0 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION The accompanying unaudited interim financial statements of AudioEye, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10‑K for the fiscal year ended December 31, 2018, as filed with the SEC on March 27, 2019. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts have been reclassified to conform to current period classification. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2018 as reported in the Company’s Annual Report on Form 10‑K have been omitted. Corporate Information and Background AudioEye, Inc. (“we”, “our” or the “Company”) was incorporated on May 20, 2005 in the state of Delaware. The Company has developed patented, Internet content publication and distribution software that enables conversion of media into accessible formats and allows for real time distribution to end users on any Internet connected device. The Company’s focus is to create more comprehensive access to Internet and other media to all people regardless of their network connection, device, location, or disabilities. The Company is focused on developing innovations in the field of networked and device embedded audio technology. Our intellectual property is primarily comprised of trade secrets, trademarks, issued, published and pending patent applications, copyrights and technological innovation. We have a patent portfolio comprised of eight issued patents in the United States. We also have one published/pending patent application and two patent applications being prepared for filing via the Patent Cooperation Treaty (“PCT”) (international). We have a trademark portfolio comprised of seven United States trademark registrations. Our common stock has been listed on the NASDAQ Capital Market under the symbol “AEYE” since September 4, 2018. Prior to September 4, 2018, our common stock was quoted on the OTCQB and the OTC Bulletin Board beginning on April 15, 2013 under the same symbol. In August 2018, the Company sold 1,000,000 shares (the “Shares”) of its common stock at $6.25 per share for net proceeds of $5,609,215, after costs and expenses of $640,785 (the “Private Placement”). At the closing of the Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the investors pursuant to which the Company agreed to register the Shares for resale. On September 4, 2018, the Company filed a registration statement on Form S-1 covering the resale of the securities subject to the Registration Rights Agreement, as well as certain other securities of the Company. On July 5, 2019, the Company filed a post-effective amendment to the registration statement on Form S-1 covering the resale of such securities in order to, among other things, incorporate into the filing information included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2019. On August 1, 2018, the Company amended its Certificate of Incorporation to implement a reverse stock split in the ratio of 1 share for every 25 shares of common stock and to reduce the number of authorized shares of common stock from 250,000,000 to 50,000,000. As a result, 186,994,384 shares of the Company’s common stock were exchanged for 7,479,775 shares of the Company’s common stock. These financial statements have been retroactively restated to reflect the reverse stock split. Revenue Recognition Revenue is recognized when delivery of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. We determine revenue recognition through the following five steps: · Identify the contract with the customer; · Identify the performance obligations in the contract; · Determine the transaction price; · Allocate the transaction price to the performance obligations in the contract; and · Recognize revenue when, or as, the performance obligations are satisfied. Certain Software as a Service (“SaaS”) invoices are prepared on an annual basis. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when earned. Subscription revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Payments received in advance of services being rendered are recorded as deferred revenue. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when earned. We generate most of our revenue from subscription services, which are primarily comprised of subscription fees from customers on the Ally Platform. The following table presents our revenue disaggregated by type of good or service and sales channel: Nine months ended September 30, 2019 2018 Revenue – Direct $ 5,134,901 $ 2,999,738 Revenue – Indirect (Vertical partners) 2,062,835 878,814 Total revenue $ 7,197,736 $ 3,878,552 In accordance with Accounting Standard ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), the Company records accounts receivable for amounts invoiced to customers for which service has been rendered and for amounts invoiced and are in deferred revenue but for which the Company has an unconditional right to consideration as provided under the contractual arrangement. The table below compares the deferred revenue balance as of September 30, 2019 versus December 31, 2018: September 30, December 31, 2019 2018 Deferred revenue $ 4,311,688 $ 3,028,787 As of September 30, 2019, $4,119,567 was classified as short term deferred revenue and is expected to be recognized over the next twelve months following September 30, 2019. The remaining $192,121 is long-term deferred revenue to be recognized thereafter. $2,128,766 (70)% of deferred revenue from December 31, 2018 has been recognized to revenue through September 30, 2019. At September 30, 2019, the Company had one customer representing 17% of the outstanding accounts receivable. At December 31, 2018, the Company had a different customer representing 22% of the outstanding accounts receivable. The Company had one major customer (including such customer’s affiliates) which generated approximately 9% and 10% of the Company’s revenue in the three and nine months ended September 30, 2019, respectively, and 11% and 12% of the Company’s revenue in the three and nine months ended September 30, 2018, respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates. Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash. Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. “Diluted earnings per share” reflects the potential dilution that could occur if our share-based awards and convertible securities were exercised or converted into common stock. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (i.e., the difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock is computed using the if-converted method, which assumes conversion at the beginning of the year. However, when a net loss exists, no potential common stock equivalents are included in the computation of the diluted per-share amount because the computation would result in an anti-dilutive per-share amount. Potentially dilutive securities excluded from the computation of basic and diluted net earnings (loss) per share for the nine months ended September 30, 2019 and 2018 are as follows: 2019 2018 Preferred stock 292,362 280,389 Options to purchase common stock 903,847 1,025,247 Warrants to purchase common stock 537,321 1,881,041 Restricted stock units 381,359 194,674 Totals 2,114,889 3,381,351 Fair Value Measurements Fair value is an estimate of the exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under generally accepted accounting principles provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities. The Company has no liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. The following are the Fair Value Fair Value Hierarchy Assets Marketable securities, September 30, 2019 $ 762 Level 1 Marketable securities, December 31, 2018 $ 510 Level 1 Leases In February 2016, the Financial Accounting Standards Board (“FASB”) established ASC Topic 842, Leases (Topic 842), by issuing ASU No. 2016‑02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018‑01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018‑10, Codification Improvements to Topic 842, Leases; and ASU No. 2018‑11, Targeted Improvements. The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted the new standard on January 1, 2019 using the modified-retrospective method, with an effective date or application date of January 1, 2019 and thus did not adjust comparative periods. The new standard provides a number of optional practical expedients in transition. The Company has elected the “package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight practical expedient. The new standard had a material effect on the Company’s financial statements. The most significant effects of adoption relate to (1) the recognition of new ROU assets and lease liabilities on the Company’s balance sheet for real estate operating leases; and (2) providing significant new disclosures about the Company’s leasing activities. As of January 1, 2019, the Company recognized additional operating lease liabilities of $568,268 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The Company recognized corresponding ROU assets of $557,212. In February 2019, the Company entered into a new lease in Marietta, Georgia, which resulted in ROU assets of an incremental $483,565 being recognized on the balance sheet upon lease commencement in June 2019. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, that the Company does not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company changed its disclosed lease recognition policies and practices, as well as to other related financial statement disclosures due to the adoption of this standard. See Note 6 for these revised disclosures for fiscal year 2019. Recent Accounting Pronouncements There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows. |
MANAGEMENT'S LIQUIDITY PLANS
MANAGEMENT'S LIQUIDITY PLANS | 9 Months Ended |
Sep. 30, 2019 | |
MANAGEMENT'S LIQUIDITY PLANS | |
MANAGEMENT'S LIQUIDITY PLANS | NOTE 2 — MANAGEMENT’S LIQUIDITY PLANS As of September 30, 2019, the Company had cash of $3,463,899 and a working capital of $341,009. In addition, the Company used actual net cash in operations of $1,404,992 and $4,322,064 during the three- and nine-months ended September 30, 2019, respectively. In August 2018, the Company sold 1,000,000 shares of its common stock at $6.25 per share for net proceeds of $5,609,215, after costs and expenses of $640,785. In connection with the October 9, 2015 Note and Warrant Purchase Agreement, the Company received proceeds from the issuance of convertible notes payable of $100,000 in September 2018 and $124,975 in October 2018. In August 2019, the Company negotiated with holders of certain warrants to purchase the Company’s common stock with respect to a transaction in which the Company and the holders agreed to amend certain warrant agreements to provide that from the date of amendment through August 16, 2019, the exercise price was reduced from $2.50 to $1.63 per share for warrants to purchase an aggregate of 1,194,990 shares and from $6.25 to $4.07 per share for warrants to purchase an aggregate of 85,719 shares, provided that any exercise during such period was in full and the exercise price was paid in cash.Proceeds from the amended warrants exercised was approximately $2.1 million. In August 2019, the Company negotiated an agreement for a $2.0 million Line of Credit (the “LOC”) with Sero Capital LLC, a shareholder who owns more than 10% of the outstanding shares of the Company’s common stock. The Company’s primary source of operating funds has been from revenue generated from sales and cash proceeds from the sale of common stock and the issuance of convertible and other debt. With the August warrant exercises and the LOC, it is anticipated that the Company will have cash sufficient to fund operations for the next twelve months. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2019 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 3 — PROPERTY AND EQUIPMENT Property and equipment as of September 30, 2019 and December 31, 2018 is summarized as follows: September 30, December 31, 2019 2018 Computer equipment $ 64,195 $ 62,170 Equipment under finance lease 156,858 95,506 Furniture and fixtures 48,746 4,968 Total 269,799 162,644 Less accumulated depreciation (101,994) (54,637) Property and equipment, net $ 167,805 $ 108,007 Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful life or term of the lease. When property or equipment is retired or otherwise disposed of, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference, less any amount realized from disposition, is reflected in earnings. Included in net property and equipment are assets under finance leases (formerly known as capital leases) of $156,858, less accumulated depreciation of $46,706 as of September 30, 2019 and $95,506, less accumulated depreciation of $16,117, as of December 31, 2018. The Company spent $45,803 and $10,893 in the purchase of furniture and equipment during the nine months ended September 30, 2019 and 2018, respectively. The Company also leased $61,352 and $77,864 in equipment during the nine months ended September 30, 2019 and 2018, respectively. Depreciation expense was $19,480 and $47,357 for the three and nine months ended September 30, 2019, respectively. Depreciation expense was $9,851 and $21,600 for the three and nine months ended September 30, 2018, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 4 — INTANGIBLE ASSETS For the nine months ended September 30, 2019 and 2018, the Company invested in software development costs in the amounts of $137,373 and $308,933, respectively. Patents, technology and other intangibles with contractual terms are generally amortized over their estimated useful lives of ten years. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted. Software development costs are amortized over their estimated useful life of three years. Intangible assets consisted of the following: September 30, December 31, 2019 2018 Patents $ 3,697,709 $ 3,697,709 Capitalized software development 1,547,632 1,410,259 Domain name 10,000 10,000 Accumulated amortization (3,543,691) (3,056,564) Intangible assets, net $ 1,711,650 $ 2,061,404 Amortization expense for patents totaled $93,658 and $280,974 for the three and nine months ended September 30, 2019, respectively; and $93,657 and $274,341 for the three and nine months ended September 30, 2018, respectively. Amortization expense for software development totaled $72,238 and $206,153 for the three and nine months ended September 30, 2019, respectively; and $25,653 and $98,297 for the three and nine months ended September 30, 2018, respectively. Total amortization expense was $487,127 and $372,638 for the nine months ended September 30, 2019 and 2018, respectively. |
DEFERRED COSTS
DEFERRED COSTS | 9 Months Ended |
Sep. 30, 2019 | |
DEFERRED COSTS | |
DEFERRED COSTS | NOTE 5 — DEFERRED COSTS Effective January 1, 2018, the Company capitalizes new and 12-month or longer renewal sales commission payments in the period a customer contract is obtained, and payment is received; and the commissions are amortized consistent with the transfer of the goods or services to the customer over the expected period of benefit, which we have deemed to be the contract term. Such commissions are amortized over the greater of contract term or technological obsolescence period when the underlying contracted products are technology-based, such as for the SaaS-based platforms, or the contract term when the underlying contracted products are not technology-based. The table below summarizes the activity within the deferred commission costs account, during the nine months ended September 30, 2019: Commission December 31, Costs Commission September 30, 2018 Deferred Amortized 2019 Deferred costs, short term $ 176,006 $ 196,796 $ (174,841) $ 197,961 Deferred costs, long term 93,790 62,996 — 156,786 Deferred commission costs $ 269,796 $ 259,792 $ (174,841) $ 354,747 During the three and nine months ended September 30, 2019, the Company deferred an aggregate of $123,054 and $259,792, respectively, for commissions paid. Amortization of deferred costs for the three and nine months ended September 30, 2019 was $66,766 and $174,841, respectively. During the nine months ended September 30, 2018, the Company deferred an aggregate of $201,142 for commissions paid and reclassified from equity $80,153 previously paid amounts that were originally expensed as commissions. Amortization of deferred costs for the three and nine months ended September 30, 2018 was $34,214 and $59,705, respectively. |
LEASE LIABILITIES AND RIGHT OF
LEASE LIABILITIES AND RIGHT OF USE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | NOTE 6 — LEASE LIABILITIES AND RIGHT OF USE ASSETS Finance Leases September 30, December 31, 2019 2018 Finance equipment lease dated April 5, 2018 $ 9,076 $ 13,056 Finance equipment lease dated May 8, 2018 10,076 14,525 Finance equipment lease dated June 27, 2018 15,528 21,701 Finance equipment lease dated September 18, 2018 11,290 15,368 Finance equipment lease dated September 28, 2018 12,530 16,672 Finance equipment lease dated February 20, 2019 15,665 — Finance equipment lease dated June 4, 2019 18,761 — Finance equipment lease dated September 30, 2019 20,695 — Total finance lease liabilities 113,621 81,322 Less current portion (51,735) (30,172) Long term portion $ 61,886 $ 51,150 During the nine months ended September 30, 2019, the Company entered into three finance leases for computer equipment, each for a three-year term. The Company recognized these arrangements as finance leases based on the determination that the leases exceeded 75% of the economic life of the underlying assets. The Company initially recorded the equipment and the finance leases liability at the estimated present value of the minimum lease payments of $19,754, $20,903 and $20,695, respectively. During the year ended December 31, 2018, the Company entered into five finance leases (formerly known as capital leases) for computer equipment for a three-year term. The Company recognized these arrangements as finance leases based on the determination that the leases exceeded 75% of the economic life of the underlying assets. The Company initially recorded the equipment and the finance lease liability at the estimated present value of the minimum lease payments of $95,506. The leases include base monthly payments in the aggregate of $4,761, due on the monthly anniversary of each contract. At the expiration of the lease, the Company is required to return all leased equipment to the lessor with right of repurchase at fair value. The Company has made payments under these leases in the total amount of $29,053 during the nine months ended September 30, 2019. The effective interest rate of the finance leases is estimated at 6% based on the implicit rate in the lease agreements. The following summarizes the right to use assets under finance leases included in property and equipment: September 30, December 31, Classes of Property 2019 2018 Computer equipment $ 156,858 $ 95,506 Less: accumulated depreciation (46,706) (16,117) $ 110,152 $ 79,389 The following summarizes total future minimum finance lease payments at September 30, 2019: Period ending December 31, 2019 $ 14,839 2020 57,126 2021 41,382 2022 10,083 Total minimum lease payments 123,430 Amount representing interest (9,809) Present value of minimum lease payments 113,621 Current portion of finance lease obligations 51,735 Finance lease obligations, less current portion $ 61,886 Operating Leases The Company’s principal offices are located at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, consisting of approximately 5,151 square feet as of September 30, 2019. The Company’s principal office originally consisted of approximately 2,362 square feet. On December 21, 2017, effective February 1, 2018, the Company amended its existing lease to expand its principal office to approximately 4,248 square feet and to extend the expiration date to September 30, 2021. Beginning February 1, 2018, the basic rent increased to $9,598 per month. On October 2, 2018, effective December 1, 2018, the Company further amended its existing lease to expand its principal office to approximately 5,151 square feet. In accordance with the amended lease, rent increased to $11,810 on January 1, 2019, escalating over time to $12,977 at the end of the lease, which was further extended to October 31, 2022. The Company also had offices in Atlanta,Georgia located at 3901 Roswell Road, Suite 134, leased for an aggregate of $3,937 per month as of December 31, 2017 under a lease that expired on September 30, 2019. On December 29, 2017, effective February 1, 2018, the Company amended its existing lease to expand its Atlanta office from approximately 2,739 square feet to approximately 3,831 square feet. Beginning February 1, 2018, the basic rent increased by $1,500 through the remainder of the lease term. In February 2019, the Company entered into a lease for new offices in Marietta, Georgia located at 450 Franklin Gateway, Marietta, Georgia consisting of approximately 9,662 square feet. The new lease commenced on June 1, 2019, with move-in on June 15, 2019. Beginning in 2017, the Company leased office space in New York for $300 per month, which was increased to $850 per month in October 2018 through May 31, 2019. Beginning in June 2019, the Company moved to larger office space in New York, leased for $4,482 per month, for a term of 12 months ending May 31, 2020. Beginning November 1, 2015, we subleased an office in Scottsdale, Arizona from a company controlled by our Executive Chairman for $3,578 per month, which continues on a month to month basis as of September 30, 2019. These New York and Scottsdale properties were considered short-term leases and therefore were not measured under Topic 842. The Company has made operating lease payments in the amount of $222,564 during the nine months ended September 30, 2019. Rent expense charged to operations, which differs from rent paid due to rent credits and to increasing amounts of base rent, is calculated by allocating total rental payments on a straight-line basis over the term of the lease. Operating lease liabilities at September 30, 2019 and January 1, 2019 consist of: September 30, January 1, 2019 2019 Tucson Arizona office lease $ 431,815 $ 518,309 Marietta Georgia office lease 481,864 — Atlanta Georgia office lease — 49,959 Total operating lease liabilities 913,679 568,268 Less current portion (204,411) (166,252) Long term portion $ 709,268 $ 402,016 As of January 1, 2019, the Company adopted the provisions of ASC Topic 842 using the modified retrospective method. In adopting ASC Topic 842, Leases (Topic 842), the Company elected the ‘package of practical expedients’, which permitted it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. Effective January 1, 2019, the Company initially recognized operating lease liabilities of $568,268 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The discount rate utilized in such present value calculation was 6% based on an estimate of the Company’s incremental borrowing rate. At such time, the Company also recognized corresponding right-of-use (ROU) assets of $557,212 and eliminated the prior period deferred rent of $11,056. During the nine months ended September 30, 2019, the Company entered into an operating lease for new office space in Marietta, Georgia, for a five-year term. The Company measured and recorded a right of use asset and corresponding operating lease liability of $483,565 at the lease commencement date in June 2019. The following summarizes total future minimum operating lease payments at September 30, 2019: Period ending December 31, 2019 $ 79,854 2020 267,500 2021 262,219 2022 244,245 2023 118,166 2024 80,638 Total minimum lease payments 1,052,622 Less: present value discount (138,943) Present value of minimum lease payments 913,679 Current portion of operating lease obligations 204,411 Operating lease obligations, less current portion $ 709,268 The following summarizes lease expenses for the nine months ended September 30, 2019: Finance lease expenses: Depreciation/amortization expense $ 34,185 Interest on lease liabilities 5,269 Finance lease expense 39,454 Operating lease expense 193,739 Short-term lease expense 66,784 Total lease expenses $ 299,977 |
CREDIT FACILITY-RELATED PARTY
CREDIT FACILITY-RELATED PARTY | 9 Months Ended |
Sep. 30, 2019 | |
CREDIT FACILITY-RELATED PARTY | |
CREDIT FACILITY-RELATED PARTY | NOTE 7 — CREDIT FACILITY-RELATED PARTY On August 14, 2019, the Company entered into a Loan Agreement (the “Loan Agreement”) with Sero Capital LLC, a shareholder who owns more than 10% of the outstanding shares of common stock of the Company. The beneficial owner of Sero Capital LLC is David Moradi, who became a director of the company on November 8, 2019. The Loan Agreement provides the Company with an unsecured credit facility under which the Company may borrow up to the aggregate principal amount of $2,000,000. Any advances under the Loan Agreement will bear interest at a per annum rate of 10% (subject to increase in the event of a default), which is payable monthly and may, at the Company’s option, be paid either in cash or by the issuance of shares of the Company’s common stock. The term of the Loan Agreement extends through August 14, 2020, subject to earlier termination as provided in the Loan Agreement. The Company’s obligations under the Loan Agreement are subject to acceleration upon the occurrence of an event of default (as defined in the Loan Agreement). The Company may prepay its obligations under the Loan Agreement without penalty, but subject to certain limitations regarding the number, timing and dollar amounts of prepayments. The Loan Agreement provides for certain customary covenants, representations and events of default. No amounts have been drawn under the Loan Agreement as of September 30, 2019. In consideration of the credit facility, the Company issued to Sero Capital LLC a common stock warrant to acquire up to a total of 146,667 shares of the Company’s common stock at an exercise price of $6.00 per share, which exercise price may be paid in cash or, at the election of the holder, in a cashless, or “net,” exercise transaction. The warrant expires one year from the date of issuance. The estimated fair value of the Sero Capital LLC warrant was $219,335 at date of issuance. The Company valued the warrants using the Black-Scholes pricing model and the following assumptions: contractual term of 1 year, a risk-free interest rate of 1.86%, a dividend yield of 0%, and volatility of 75.9%. The deferred costs attributed to the value of the warrants of $219,335 is amortized ratably over the term of the credit facility as interest expense. As of September 30, 2019, the unamortized balance was $182,779 and included in prepaid expenses and other current assets on the consolidated balance sheet. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 8 — RELATED PARTY TRANSACTIONS As of September 30, 2019, and December 31, 2018, the total balances of related party payable were $4,541 and $14,467, respectively, related to reimbursement for employee paid travel on behalf of the Company. Sero Capital LLC, beneficially owned by David Moradi who became a director of the company on November 8, 2019, was paid $30,000 in consulting fees through September 30,2019. See Note 7 relating to our Credit Facility. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 9 — STOCKHOLDERS’ EQUITY Preferred Stock As of September 30, 2019, and December 31, 2018, the Company had 105,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”), issued at $10 per share, paying a 5% cumulative annual dividend and convertible for common stock at a price of $4.385 per share. For the nine months ended September 30, 2019, preferred stockholders earned, but were not paid, $39,267 in annual dividends, or equivalent to 8,955 shares of common stock based on a conversion price of $4.385 per share. As of September 30, 2019, and December 31, 2018, cumulative and unpaid dividends were $232,007 and $192,740, respectively, or equivalent to 52,909 and 43,954 shares of common stock, respectively, based on a conversion price of $4.385 per share. On any matter presented to the stockholders of the Company, holders of Preferred Stock are entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock are convertible as of the record date to vote on such matter. As long as any shares of Preferred Stock are outstanding, the Company has certain restrictions on share repurchases or amendments to the Certificate of Incorporation in a manner that adversely affects any rights of the preferred stockholders. In addition, the preferred stockholders have a liquidation preference for purposes of which the Preferred Stock would be valued at $10 per share plus accrued cumulative annual dividend. At September 30, 2019 and December 31, 2018, the total liquidation preference was valued at $1,287,007 and $1,242,740, respectively. In the event of any liquidity event, holders of each share of Preferred Stock shall be entitled to be paid the liquidation preference out of the assets of the Company legally available before any sums shall be paid to holders of common stock. Common Stock As of September 30, 2019, and December 31, 2018, the Company had 8,876,555 and 7,579,995 shares, respectively, of common stock issued and outstanding. In the nine months ended September 30, 2019, the Company issued 21,932 shares of its common stock upon the exercise of options, for aggregate proceeds of $24,897. In the nine months ended September 30, 2019, the Company issued 1,252,319 shares of its common stock, upon the exercise of outstanding warrants to purchase an aggregate of 1,252,319 shares of common stock, for aggregate proceeds of $2,231,745. In the nine months ended September 30, 2019, the Company issued an aggregate of 11,055 shares of its common stock upon the net exercise of 15,596 outstanding options and issued an aggregate of 11,254 shares of its common stock upon the net exercise of outstanding warrants to purchase 27,231 shares of common stock. Options The following table summarizes the Company’s outstanding options activity during the nine months ended September 30, 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2018 997,989 $ 4.67 925,545 $ 4,705,220 Granted 121,639 7.48 — Exercised (37,528) 1.75 Forfeited/Expired (178,253) 12.28 Outstanding at September 30, 2019 903,847 $ 3.67 766,350 $ 1,209,562 On February 7, 2019, the Company granted an aggregate of 28,700 incentive stock options to employees newly hired since June 4, 2018. The options to purchase shares of common stock are exercisable at $10.55 per share, have a term of five years, and vest as to 50% of the options at the vesting commencement date, which is generally one year from the date of hire (vesting commencement dates range from June 4, 2019 through January 25, 2020), and vest as to the remaining 50% of the options in eight equal quarterly installments commencing on the first day of each calendar quarter following the vesting commencement date and installments continuing on the first day of each of the seven calendar quarters thereafter. All vesting is subject to the employee’s continued service through the vesting date. The exercise price was determined using the closing price of the Company’s common stock on February 7, 2019. The Black-Scholes value on the grant date of the options was $258,392. On June 3, 2019, the Company granted an aggregate of 92,939 nonqualified stock options to employees newly hired since February 7, 2019, and longer-tenured employees for performance in 2018. The options to purchase shares of common stock are exercisable at $6.53 per share, have a term of ten years, and vest in three approximately equal annual installments on the first three anniversaries of the grant date. All vesting is subject to the employee’s continued service through the vesting date. The exercise price was determined using the closing price of the Company’s common stock on June 3, 2019. The Black-Scholes value on the grant date of the options was $571,471. Option grants during the nine months ended September 30, 2019 were valued using the Black-Scholes pricing model. Significant assumptions used in the valuation include expected term of 3.25 to 6.00 years, expected volatility of 152.58% to 156.23%, risk free interest rate of 1.83% to 2.48%, and expected dividend yield of 0%. For the three and nine months ended September 30, 2019, total stock compensation expense related to options totaled $71,002 and $236,771, respectively. For the three and nine months ended September 30, 2018, total stock compensation expense related to options totaled $60,020 and $283,218, respectively. As of September 30, 2019, the outstanding unamortized stock compensation expense related to options was $600,845 (which will be recognized through June 2022). Warrants The following table summarizes the Company’s outstanding warrants activity for the nine months ended September 30, 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2018 1,781,715 $ 4.20 $ 8,930,058 Granted 146,667 6.00 1.00 — Exercised (1,279,550) 1.85 Forfeited/Expired (111,511) 10.72 Outstanding at September 30, 2019 537,321 $ 7.34 $ 63,500 In August 2019, the Company negotiated with holders of certain warrants to purchase the Company’s common stock with respect to a transaction in which the Company and the holders agreed to amend certain warrant agreements to provide that from the date of amendment through August 16, 2019, the exercise price was reduced from $2.50 to $1.63 per share for warrants to purchase an aggregate of 1,194,990 shares and from $6.25 to $4.07 per share for warrants to purchase an aggregate of 85,719 shares, provided that any exercise during such period was in full and the exercise price was paid in cash. During the August period, an aggregate of 1,212,136 warrants to purchase the Company’s common stock were exercised for net proceeds of $2,114,918. On August 14, 2019, the Company issued 146,667 warrants to acquire the Company’s common stock at an exercise price of $6.00 per share for a term of one year (See Note 7). For the three and nine months ended September 30, 2019, warrant-based compensation expense was $0. For the three and nine months ended September 30, 2018, the Company incurred warrant-based compensation expense of $0 and $110,600, respectively. There was no outstanding unamortized stock-based compensation expense related to warrants as of September 30, 2019. Restricted stock units (“RSUs”) The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2019: Restricted stock units issued as of December 31, 2018 222,514 Granted 158,845 Total Restricted stock units issued at September 30, 2019 381,359 Vested at September 30, 2019 242,514 Unvested restricted stock units as of September 30, 2019 138,845 On June 3, 2019, the Company granted 11,280 RSUs to each of Alexandre Zyngier, Ernest Purcell and Anthony Coelho for their continued service on the Board of Directors. Such RSUs will vest on June 3, 2020, subject to the director’s continuous service through the vesting date. The settlement date for such RSUs is the earlier of (i) June 3, 2026 or (ii) the date on which the Company undergoes a change of control. The fair value of the RSUs at grant date was $220,975. On June 3, 2019, the Company granted 20,000 RSUs to an employee who is also a shareholder. Such RSUs will vest on September 3, 2019, and such vesting was subject to the employee’s continuous service through the vesting date. The settlement date for such RSUs is the earlier of (i) promptly after the vesting date or (ii) in any event no later than March 15, 2020. The fair value of the RSUs at grant date was $130,600. On June 3, 2019, the Company granted 80,900 RSUs to Sachin Barot, its Chief Financial Officer, in accordance with his employment agreement. Such RSUs will vest annually over a three-year period, in installments of (i) 26,967 RSUs on June 3, 2020, (ii) 26,967 RSUs on June 3, 2021 and (iii) 26,966 RSUs on June 3, 2022, subject to Mr. Barot’s continuous service through the vesting date. The settlement date for such RSUs is the earlier of (a) promptly after each vesting date or (b) in any event no later than March 15 of the calendar year following the calendar year in which such vesting occurs. The fair value of the RSUs at grant date was $528,277. On August 19, 2019, the Company granted 24,105 RSUs to Joel Horwitz in accordance with a consulting agreement. Such RSUs will vest in installments according to performance conditions establishing certain milestones to be achieved within a timeframe stipulated by the consulting agreement, and as determined quarterly and certified by the Compensation Committee of the Board of Directors. The settlement date for such RSUs is the earlier of (a) promptly after each vesting date or (b) in any event no later than March 15 of the calendar year following the calendar year in which such vesting occurs. The fair value of the RSUs at grant date was $95,697. For the three and nine months ended September 30, 2019, the Company incurred RSU-based compensation expense of $202,213 and $760,596, respectively. For the three and nine months ended September 30, 2018, the Company incurred RSU-based compensation expense of $32,398 and $336,625, respectively. The outstanding unamortized stock-based compensation expense related to RSUs was $703,174 (which will be recognized through May 2022) as of September 30, 2019. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 — COMMITMENTS AND CONTINGENCIES Litigation We may become involved in various routine disputes and allegations incidental to our business operations. While it is not possible to determine the ultimate disposition of these matters, our management believes that the resolution of any such matters, should they arise, is not likely to have a material adverse effect on our financial position or results of operations. |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Corporate Information and Background | Corporate Information and Background AudioEye, Inc. (“we”, “our” or the “Company”) was incorporated on May 20, 2005 in the state of Delaware. The Company has developed patented, Internet content publication and distribution software that enables conversion of media into accessible formats and allows for real time distribution to end users on any Internet connected device. The Company’s focus is to create more comprehensive access to Internet and other media to all people regardless of their network connection, device, location, or disabilities. The Company is focused on developing innovations in the field of networked and device embedded audio technology. Our intellectual property is primarily comprised of trade secrets, trademarks, issued, published and pending patent applications, copyrights and technological innovation. We have a patent portfolio comprised of eight issued patents in the United States. We also have one published/pending patent application and two patent applications being prepared for filing via the Patent Cooperation Treaty (“PCT”) (international). We have a trademark portfolio comprised of seven United States trademark registrations. Our common stock has been listed on the NASDAQ Capital Market under the symbol “AEYE” since September 4, 2018. Prior to September 4, 2018, our common stock was quoted on the OTCQB and the OTC Bulletin Board beginning on April 15, 2013 under the same symbol. In August 2018, the Company sold 1,000,000 shares (the “Shares”) of its common stock at $6.25 per share for net proceeds of $5,609,215, after costs and expenses of $640,785 (the “Private Placement”). At the closing of the Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the investors pursuant to which the Company agreed to register the Shares for resale. On September 4, 2018, the Company filed a registration statement on Form S-1 covering the resale of the securities subject to the Registration Rights Agreement, as well as certain other securities of the Company. On July 5, 2019, the Company filed a post-effective amendment to the registration statement on Form S-1 covering the resale of such securities in order to, among other things, incorporate into the filing information included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2019. On August 1, 2018, the Company amended its Certificate of Incorporation to implement a reverse stock split in the ratio of 1 share for every 25 shares of common stock and to reduce the number of authorized shares of common stock from 250,000,000 to 50,000,000. As a result, 186,994,384 shares of the Company’s common stock were exchanged for 7,479,775 shares of the Company’s common stock. These financial statements have been retroactively restated to reflect the reverse stock split. |
Revenue Recognition | Revenue Recognition Revenue is recognized when delivery of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. We determine revenue recognition through the following five steps: · Identify the contract with the customer; · Identify the performance obligations in the contract; · Determine the transaction price; · Allocate the transaction price to the performance obligations in the contract; and · Recognize revenue when, or as, the performance obligations are satisfied. Certain Software as a Service (“SaaS”) invoices are prepared on an annual basis. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when earned. Subscription revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Payments received in advance of services being rendered are recorded as deferred revenue. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when earned. We generate most of our revenue from subscription services, which are primarily comprised of subscription fees from customers on the Ally Platform. The following table presents our revenue disaggregated by type of good or service and sales channel: Nine months ended September 30, 2019 2018 Revenue – Direct $ 5,134,901 $ 2,999,738 Revenue – Indirect (Vertical partners) 2,062,835 878,814 Total revenue $ 7,197,736 $ 3,878,552 In accordance with Accounting Standard ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), the Company records accounts receivable for amounts invoiced to customers for which service has been rendered and for amounts invoiced and are in deferred revenue but for which the Company has an unconditional right to consideration as provided under the contractual arrangement. The table below compares the deferred revenue balance as of September 30, 2019 versus December 31, 2018: September 30, December 31, 2019 2018 Deferred revenue $ 4,311,688 $ 3,028,787 As of September 30, 2019, $4,119,567 was classified as short term deferred revenue and is expected to be recognized over the next twelve months following September 30, 2019. The remaining $192,121 is long-term deferred revenue to be recognized thereafter. $2,128,766 (70)% of deferred revenue from December 31, 2018 has been recognized to revenue through September 30, 2019. At September 30, 2019, the Company had one customer representing 17% of the outstanding accounts receivable. At December 31, 2018, the Company had a different customer representing 22% of the outstanding accounts receivable. The Company had one major customer (including such customer’s affiliates) which generated approximately 9% and 10% of the Company’s revenue in the three and nine months ended September 30, 2019, respectively, and 11% and 12% of the Company’s revenue in the three and nine months ended September 30, 2018, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. “Diluted earnings per share” reflects the potential dilution that could occur if our share-based awards and convertible securities were exercised or converted into common stock. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (i.e., the difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock is computed using the if-converted method, which assumes conversion at the beginning of the year. However, when a net loss exists, no potential common stock equivalents are included in the computation of the diluted per-share amount because the computation would result in an anti-dilutive per-share amount. Potentially dilutive securities excluded from the computation of basic and diluted net earnings (loss) per share for the nine months ended September 30, 2019 and 2018 are as follows: 2019 2018 Preferred stock 292,362 280,389 Options to purchase common stock 903,847 1,025,247 Warrants to purchase common stock 537,321 1,881,041 Restricted stock units 381,359 194,674 Totals 2,114,889 3,381,351 |
Fair Value Measurements | Fair Value Measurements Fair value is an estimate of the exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under generally accepted accounting principles provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities. The Company has no liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018. The following are the Fair Value Fair Value Hierarchy Assets Marketable securities, September 30, 2019 $ 762 Level 1 Marketable securities, December 31, 2018 $ 510 Level 1 |
Leases | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) established ASC Topic 842, Leases (Topic 842), by issuing ASU No. 2016‑02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018‑01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018‑10, Codification Improvements to Topic 842, Leases; and ASU No. 2018‑11, Targeted Improvements. The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted the new standard on January 1, 2019 using the modified-retrospective method, with an effective date or application date of January 1, 2019 and thus did not adjust comparative periods. The new standard provides a number of optional practical expedients in transition. The Company has elected the “package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight practical expedient. The new standard had a material effect on the Company’s financial statements. The most significant effects of adoption relate to (1) the recognition of new ROU assets and lease liabilities on the Company’s balance sheet for real estate operating leases; and (2) providing significant new disclosures about the Company’s leasing activities. As of January 1, 2019, the Company recognized additional operating lease liabilities of $568,268 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The Company recognized corresponding ROU assets of $557,212. In February 2019, the Company entered into a new lease in Marietta, Georgia, which resulted in ROU assets of an incremental $483,565 being recognized on the balance sheet upon lease commencement in June 2019. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, that the Company does not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company changed its disclosed lease recognition policies and practices, as well as to other related financial statement disclosures due to the adoption of this standard. See Note 6 for these revised disclosures for fiscal year 2019. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows. |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Schedule of disaggregation of revenue | The following table presents our revenue disaggregated by type of good or service and sales channel: Nine months ended September 30, 2019 2018 Revenue – Direct $ 5,134,901 $ 2,999,738 Revenue – Indirect (Vertical partners) 2,062,835 878,814 Total revenue $ 7,197,736 $ 3,878,552 |
Schedule of deferred revenue, by arrangement | The table below compares the deferred revenue balance as of September 30, 2019 versus December 31, 2018: September 30, December 31, 2019 2018 Deferred revenue $ 4,311,688 $ 3,028,787 |
Schedule of antidilutive securities excluded from computation of earnings Per share | Potentially dilutive securities excluded from the computation of basic and diluted net earnings (loss) per share for the nine months ended September 30, 2019 and 2018 are as follows: 2019 2018 Preferred stock 292,362 280,389 Options to purchase common stock 903,847 1,025,247 Warrants to purchase common stock 537,321 1,881,041 Restricted stock units 381,359 194,674 Totals 2,114,889 3,381,351 |
Schedule of fair value, assets and liabilities measured on recurring basis | The following are the Fair Value Fair Value Hierarchy Assets Marketable securities, September 30, 2019 $ 762 Level 1 Marketable securities, December 31, 2018 $ 510 Level 1 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of property, plant and equipment | Property and equipment as of September 30, 2019 and December 31, 2018 is summarized as follows: September 30, December 31, 2019 2018 Computer equipment $ 64,195 $ 62,170 Equipment under finance lease 156,858 95,506 Furniture and fixtures 48,746 4,968 Total 269,799 162,644 Less accumulated depreciation (101,994) (54,637) Property and equipment, net $ 167,805 $ 108,007 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
INTANGIBLE ASSETS | |
Schedule of Finite-Lived Intangible Assets | Intangible assets consisted of the following: September 30, December 31, 2019 2018 Patents $ 3,697,709 $ 3,697,709 Capitalized software development 1,547,632 1,410,259 Domain name 10,000 10,000 Accumulated amortization (3,543,691) (3,056,564) Intangible assets, net $ 1,711,650 $ 2,061,404 |
DEFERRED COSTS (Tables)
DEFERRED COSTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
DEFERRED COSTS | |
Schedule of deferred policy acquisition costs | The table below summarizes the activity within the deferred commission costs account, during the nine months ended September 30, 2019: Commission December 31, Costs Commission September 30, 2018 Deferred Amortized 2019 Deferred costs, short term $ 176,006 $ 196,796 $ (174,841) $ 197,961 Deferred costs, long term 93,790 62,996 — 156,786 Deferred commission costs $ 269,796 $ 259,792 $ (174,841) $ 354,747 |
LEASE LIABILITIES AND RIGHT O_2
LEASE LIABILITIES AND RIGHT OF USE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |
Schedule of finance leased assets | September 30, December 31, 2019 2018 Finance equipment lease dated April 5, 2018 $ 9,076 $ 13,056 Finance equipment lease dated May 8, 2018 10,076 14,525 Finance equipment lease dated June 27, 2018 15,528 21,701 Finance equipment lease dated September 18, 2018 11,290 15,368 Finance equipment lease dated September 28, 2018 12,530 16,672 Finance equipment lease dated February 20, 2019 15,665 — Finance equipment lease dated June 4, 2019 18,761 — Finance equipment lease dated September 30, 2019 20,695 — Total finance lease liabilities 113,621 81,322 Less current portion (51,735) (30,172) Long term portion $ 61,886 $ 51,150 |
Schedule of finance leased assets included in property plant and equipment | The following summarizes the right to use assets under finance leases included in property and equipment: September 30, December 31, Classes of Property 2019 2018 Computer equipment $ 156,858 $ 95,506 Less: accumulated depreciation (46,706) (16,117) $ 110,152 $ 79,389 |
Schedule of future minimum lease payments for capital leases | The following summarizes total future minimum finance lease payments at September 30, 2019: Period ending December 31, 2019 $ 14,839 2020 57,126 2021 41,382 2022 10,083 Total minimum lease payments 123,430 Amount representing interest (9,809) Present value of minimum lease payments 113,621 Current portion of finance lease obligations 51,735 Finance lease obligations, less current portion $ 61,886 |
Schedule of allocation of total rental payments | Operating lease liabilities at September 30, 2019 and January 1, 2019 consist of: September 30, January 1, 2019 2019 Tucson Arizona office lease $ 431,815 $ 518,309 Marietta Georgia office lease 481,864 — Atlanta Georgia office lease — 49,959 Total operating lease liabilities 913,679 568,268 Less current portion (204,411) (166,252) Long term portion $ 709,268 $ 402,016 |
Schedule of future minimum lease payments for operating leases | The following summarizes total future minimum operating lease payments at September 30, 2019: Period ending December 31, 2019 $ 79,854 2020 267,500 2021 262,219 2022 244,245 2023 118,166 2024 80,638 Total minimum lease payments 1,052,622 Less: present value discount (138,943) Present value of minimum lease payments 913,679 Current portion of operating lease obligations 204,411 Operating lease obligations, less current portion $ 709,268 |
Schedule of lease expense | The following summarizes lease expenses for the nine months ended September 30, 2019: Finance lease expenses: Depreciation/amortization expense $ 34,185 Interest on lease liabilities 5,269 Finance lease expense 39,454 Operating lease expense 193,739 Short-term lease expense 66,784 Total lease expenses $ 299,977 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
STOCKHOLDERS' EQUITY | |
Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes the Company’s outstanding options activity during the nine months ended September 30, 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Options Exercise Price Term Exercisable Options Outstanding at December 31, 2018 997,989 $ 4.67 925,545 $ 4,705,220 Granted 121,639 7.48 — Exercised (37,528) 1.75 Forfeited/Expired (178,253) 12.28 Outstanding at September 30, 2019 903,847 $ 3.67 766,350 $ 1,209,562 |
Schedule of Other Share-based Compensation, Activity | The following table summarizes the Company’s outstanding warrants activity for the nine months ended September 30, 2019: Weighted Intrinsic Weighted Average Value Number of Average Remaining of Warrants Exercise Price Term Warrants Outstanding at December 31, 2018 1,781,715 $ 4.20 $ 8,930,058 Granted 146,667 6.00 1.00 — Exercised (1,279,550) 1.85 Forfeited/Expired (111,511) 10.72 Outstanding at September 30, 2019 537,321 $ 7.34 $ 63,500 |
Schedule of Nonvested Restricted Stock Shares Activity | The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2019: Restricted stock units issued as of December 31, 2018 222,514 Granted 158,845 Total Restricted stock units issued at September 30, 2019 381,359 Vested at September 30, 2019 242,514 Unvested restricted stock units as of September 30, 2019 138,845 |
ORGANIZATION AND BASIS OF PRE_4
ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
ORGANIZATION AND BASIS OF PRESENTATION | ||||
Revenue - Direct | $ 5,134,901 | $ 2,999,738 | ||
Revenue - Indirect (Vertical partners) | 2,062,835 | 878,814 | ||
Total revenue | $ 2,776,436 | $ 1,494,313 | $ 7,197,736 | $ 3,878,552 |
ORGANIZATION AND BASIS OF PRE_5
ORGANIZATION AND BASIS OF PRESENTATION - Deferred Revenue, by Arrangement (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
ORGANIZATION AND BASIS OF PRESENTATION | ||
Deferred revenue | $ 4,311,688 | $ 3,028,787 |
ORGANIZATION AND BASIS OF PRE_6
ORGANIZATION AND BASIS OF PRESENTATION - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,114,889 | 3,381,351 |
Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 292,362 | 280,389 |
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 903,847 | 1,025,247 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 537,321 | 1,881,041 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 381,359 | 194,674 |
ORGANIZATION AND BASIS OF PRE_7
ORGANIZATION AND BASIS OF PRESENTATION - Fair value on a recurring basis (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities held in related party | $ 762 | $ 510 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities held in related party | $ 762 | $ 510 |
ORGANIZATION AND BASIS OF PRE_8
ORGANIZATION AND BASIS OF PRESENTATION - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Aug. 31, 2018 | Aug. 01, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Feb. 01, 2019 | Jan. 01, 2019 | |
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||||||
Stock Issued During Period, Shares, New Issues | 1,000,000 | ||||||||
Shares Issued, Price Per Share | $ 6.25 | ||||||||
Proceeds from Issuance of Common Stock | $ 5,609,215 | $ 5,609,215 | |||||||
Payments of Stock Issuance Costs | $ 640,785 | ||||||||
Stockholders' Equity Note, Stock Split | 1 share for every 25 shares | ||||||||
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | |||||
Conversion of Stock, Shares Converted | 186,994,384 | ||||||||
Conversion of Stock, Shares Issued | 7,479,775 | ||||||||
Deferred Revenue, Current | $ 4,119,567 | $ 4,119,567 | $ 2,626,712 | ||||||
Deferred Revenue, Noncurrent | 192,121 | 192,121 | 402,075 | ||||||
Deferred revenue recognized through the period | $ 2,128,766 | ||||||||
Deferred revenue recognized through the period (as a percent) | (70.00%) | ||||||||
Operating Lease Liability | 913,679 | $ 913,679 | $ 568,268 | ||||||
Operating Lease, Right-of-Use Asset | $ 877,067 | $ 877,067 | $ 0 | $ 557,212 | |||||
GA | |||||||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||||||
Operating Lease, Right-of-Use Asset | $ 483,565 | ||||||||
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | |||||||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||||||
Concentration Risk, Percentage | 9.00% | 11.00% | 10.00% | 12.00% | |||||
Accounts Receivable [Member] | Major Customer Number Two [Member] | |||||||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||||||
Concentration Risk, Percentage | 22.00% | ||||||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||||||
Concentration Risk, Percentage | 17.00% | ||||||||
Previously Reported [Member] | |||||||||
Organization Consolidation And Presentation Of Financial Statements Line Items [Line Items] | |||||||||
Common Stock, Shares Authorized | 250,000,000 |
MANAGEMENT'S LIQUIDITY PLANS (D
MANAGEMENT'S LIQUIDITY PLANS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Aug. 31, 2019 | Oct. 31, 2018 | Sep. 30, 2018 | Aug. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Aug. 14, 2019 | Dec. 31, 2018 | |
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Working Capital Deficit | $ 341,009 | $ 341,009 | |||||||
Cash | $ 3,463,899 | 3,463,899 | $ 5,741,549 | ||||||
Net Cash Provided by (Used in) Operating Activities | $ (4,322,063) | $ (1,251,559) | |||||||
Stock Issued During Period, Shares, New Issues | 1,000,000 | ||||||||
Payments of Stock Issuance Costs | $ 640,785 | ||||||||
Shares Issued, Price Per Share | $ 6.25 | ||||||||
Proceeds from Issuance of Common Stock | $ 5,609,215 | 5,609,215 | |||||||
Proceeds from Convertible Debt | $ 50,000 | ||||||||
Payments of Costs Related to Common Stock Subscriptions | $ 124,975 | ||||||||
Warrants exercise price | $ 6 | ||||||||
Warrants to purchase shares of common stock | 27,231 | 27,231 | 146,667 | ||||||
Proceeds from Warrant Exercises | $ 2,114,918 | $ 2,231,745 | |||||||
Sero Capital LLC | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants exercise price | $ 6 | ||||||||
Warrants to purchase shares of common stock | 146,667 | ||||||||
Percentage of equity interests held by Sero Capital, LLC | 10.00% | ||||||||
Maximum borrowing capacity, Line of credit (LOC) | $ 2,000,000 | ||||||||
Warrant one | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants to purchase shares of common stock | 1,194,990 | ||||||||
Warrant two | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants to purchase shares of common stock | 85,719 | ||||||||
Minimum | Warrant one | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants exercise price | $ 1.63 | ||||||||
Minimum | Warrant two | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants exercise price | 4.07 | ||||||||
Maximum | Warrant one | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants exercise price | 2.50 | ||||||||
Maximum | Warrant two | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Warrants exercise price | $ 6.25 | ||||||||
Convertible Notes Payable [Member] | |||||||||
Going Concern And Management Liquidity Plans [Line Items] | |||||||||
Net Cash Provided by (Used in) Operating Activities | $ 1,404,992 | $ 4,322,064 | |||||||
Proceeds from Convertible Debt | $ 100,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | $ 269,799 | $ 162,644 |
Less accumulated depreciation | (101,994) | (54,637) |
Property and equipment, net | 167,805 | 108,007 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | 64,195 | 62,170 |
Equipment under capital lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | 156,858 | 95,506 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment gross | $ 48,746 | $ 4,968 |
PROPERTY AND EQUIPMENT - Additi
PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation | $ 19,480 | $ 9,851 | $ 47,357 | $ 21,600 | |
Payments to Acquire Property, Plant, and Equipment | 45,803 | 10,893 | |||
Property, Plant and Equipment, Gross | 269,799 | 269,799 | $ 162,644 | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 101,994 | 101,994 | 54,637 | ||
Noncash or Part Noncash Acquisition, Fixed Assets Acquired | 61,352 | $ 77,864 | |||
Computer Equipment Under Finance Leases [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 156,858 | 156,858 | 95,506 | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 46,706 | $ 46,706 | $ 16,117 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Intangible Assets | ||
Accumulated amortization | $ (3,543,691) | $ (3,056,564) |
Intangible assets, net | 1,711,650 | 2,061,404 |
Patents [Member] | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | 3,697,709 | 3,697,709 |
Capitalized software development [Member] | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | 1,547,632 | 1,410,259 |
Domain Name [Member] | ||
Intangible Assets | ||
Finite-Lived Intangible Assets, Gross | $ 10,000 | $ 10,000 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Software Development [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | $ 487,127 | $ 372,638 | $ 487,127 | $ 372,638 | |
Amortization of Intangible Assets | 72,238 | 25,653 | 206,153 | 98,297 | |
Finite-lived Intangible Assets Acquired | 137,373 | 308,933 | |||
Patents [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | 3,697,709 | 3,697,709 | $ 3,697,709 | ||
Amortization of Intangible Assets | $ 93,658 | $ 93,657 | $ 280,974 | $ 274,341 |
DEFERRED COSTS (Details)
DEFERRED COSTS (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Deferred costs, short term - Beginning balance | $ 176,006 |
Deferred costs, long term - Beginning balance | 93,790 |
Deferred costs, short term - End balance | 197,961 |
Deferred costs, long term - End balance | 156,786 |
Accounting Standards Update 2014-09 [Member] | |
Deferred costs, long term - Beginning balance | 93,790 |
Deferred commission costs - Beginning balance | 269,796 |
Commission Costs Deferred, short term | 196,796 |
Commission Costs Deferred, long term | 62,996 |
Commission Costs Deferred | 259,792 |
Commission Amortized, Short term | (174,841) |
Commission Amortized, Long term | 0 |
Commission Amortized | (174,841) |
Deferred costs, short term - End balance | 197,961 |
Deferred costs, long term - End balance | 156,786 |
Deferred commission costs - End balance | $ 354,747 |
DEFERRED COSTS - Additional Inf
DEFERRED COSTS - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | |
Increase (Decrease) in Deferred Charges | $ 259,792 | $ 201,142 | |||
Amortization of Deferred Charges | $ 66,766 | $ 34,214 | 174,841 | 59,705 | |
Accounting Standards Update 2014-09 [Member] | |||||
Increase (Decrease) in Deferred Charges | $ 123,054 | $ 259,792 | 201,142 | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | $ 80,153 | $ 80,153 | $ 80,153 |
LEASE LIABILITIES AND RIGHT O_3
LEASE LIABILITIES AND RIGHT OF USE ASSETS (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total finance lease liabilities | $ 113,621 | $ 81,322 |
Less current portion | (51,735) | (30,172) |
Finance lease obligations, less current portion | 61,886 | 51,150 |
Finance equipment lease dated April 5, 2018 [Member] | ||
Total finance lease liabilities | 9,076 | 13,056 |
Finance equipment lease dated May 8, 2018 [Member] | ||
Total finance lease liabilities | 10,076 | 14,525 |
Finance equipment lease dated June 27, 2018 [Member] | ||
Total finance lease liabilities | 15,528 | 21,701 |
Finance equipment lease dated September 18, 2018 [Member] | ||
Total finance lease liabilities | 11,290 | 15,368 |
Finance equipment lease dated September 28, 2018 [Member] | ||
Total finance lease liabilities | 12,530 | 16,672 |
Finance equipment lease dated February 20, 2019 [Member] | ||
Total finance lease liabilities | 15,665 | 0 |
Finance equipment lease dated June 4, 2019 [Member] | ||
Total finance lease liabilities | 18,761 | 0 |
Finance equipment lease dated September 30, 2019 [Member] | ||
Total finance lease liabilities | $ 20,695 | $ 0 |
LEASE LIABILITIES AND RIGHT O_4
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Right to use assets under finance leases (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Lessee, Finance Lease, Description [Abstract] | |||
Computer equipment | $ 20,903 | $ 95,506 | $ 19,754 |
Computer Equipment [Member] | |||
Lessee, Finance Lease, Description [Abstract] | |||
Computer equipment | 156,858 | 95,506 | |
Less: accumulated depreciation | (46,706) | (16,117) | |
Property and equipment, net | $ 110,152 | $ 79,389 |
LEASE LIABILITIES AND RIGHT O_5
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum finance lease payments (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | ||
2019 | $ 14,839 | |
2020 | 57,126 | |
2021 | 41,382 | |
2022 | 10,083 | |
Total minimum lease payments | 123,430 | |
Amount representing interest | (9,809) | |
Capital Lease Obligations, Total | 113,621 | $ 81,322 |
Current portion of capital lease obligations | 51,735 | 30,172 |
Finance lease obligations, less current portion | $ 61,886 | $ 51,150 |
LEASE LIABILITIES AND RIGHT O_6
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Operating lease liabilities (Details) - USD ($) | Jan. 01, 2019 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Operating Lease, Expense | $ 1,500 | $ 3,937 | $ 4,482 | $ 193,739 | $ 300 | |
Total operating lease liabilities | 568,268 | 913,679 | 913,679 | |||
Less current portion | (166,252) | (204,411) | (204,411) | $ 0 | ||
Long term portion | 402,016 | $ 709,268 | 709,268 | $ 0 | ||
Tucson Arizona office lease [Member] | ||||||
Operating Lease, Expense | 518,309 | 431,815 | ||||
Marietta Georgia Office Lease [Member] | ||||||
Operating Lease, Expense | 0 | 481,864 | ||||
Atlanta Georgia Office Lease [Member] | ||||||
Operating Lease, Expense | $ 49,959 | $ 0 |
LEASE LIABILITIES AND RIGHT O_7
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Future minimum operating lease payments (Details) - USD ($) | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
LEASE LIABILITIES AND RIGHT OF USE ASSETS | |||
2019 | $ 79,854 | ||
2020 | 267,500 | ||
2021 | 262,219 | ||
2022 | 244,245 | ||
2023 | 118,166 | ||
2024 | 80,638 | ||
Total minimum lease payments | 1,052,622 | ||
Less: present value discount | (138,943) | ||
Present value of minimum lease payments | 913,679 | $ 568,268 | |
Current portion of operating lease obligations | 204,411 | 166,252 | $ 0 |
Operating lease obligations, less current portion | $ 709,268 | $ 402,016 | $ 0 |
LEASE LIABILITIES AND RIGHT O_8
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Lease expenses (Details) - USD ($) | Jan. 01, 2019 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 |
Finance lease expenses: | |||||
Depreciation/amortization expense | $ 34,185 | ||||
Interest on lease liabilities | 5,269 | ||||
Finance lease expense | 39,454 | ||||
Operating lease expense | $ 1,500 | $ 3,937 | $ 4,482 | 193,739 | $ 300 |
Short-term lease expense | 66,784 | ||||
Total lease expenses | $ 299,977 |
LEASE LIABILITIES AND RIGHT O_9
LEASE LIABILITIES AND RIGHT OF USE ASSETS - Additional Information (Details) | Oct. 31, 2022USD ($) | Jan. 01, 2019USD ($) | Feb. 01, 2018USD ($)ft² | Dec. 31, 2017USD ($) | Sep. 30, 2019USD ($)ft² | Sep. 30, 2019USD ($)ft² | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Feb. 01, 2019ft² | Dec. 01, 2018ft² |
Lessee Capital Lease Term of Contract | 3 years | 3 years | 3 years | |||||||
Finance Lease, Right-of-Use Asset | $ 20,903 | $ 20,903 | $ 95,506 | $ 19,754 | ||||||
Finance Lease, Base Monthly Payments | 4,761 | |||||||||
Finance Lease, Principal Payments | $ 29,053 | |||||||||
Debt Instrument, Interest Rate, Effective Percentage | 6.00% | 6.00% | ||||||||
Lease, Practical Expedients, Package [true false] | false | |||||||||
Lease, Practical Expedient, Use of Hindsight [true false] | false | |||||||||
Lease, Practical Expedient, Land Easement [true false] | false | |||||||||
Operating Lease, Payments | $ 568,268 | $ 222,564 | ||||||||
Operating Lease, Right-of-Use Asset | 557,212 | $ 877,067 | $ 877,067 | 0 | ||||||
Deferred Rent Credit, Noncurrent | 11,056 | $ 6,585 | ||||||||
Percentage of finance lease exceeding | 75.00% | 75.00% | ||||||||
Area of Land | ft² | 4,248 | 5,151 | 5,151 | 5,151 | ||||||
Operating Lease, Cost | $ 3,578 | |||||||||
Increase Lease And Rental Expense | $ 12,977 | 11,810 | $ 9,598 | 850 | ||||||
Operating Lease, Expense | $ 1,500 | $ 3,937 | $ 4,482 | 193,739 | $ 300 | |||||
Lessee, Operating Lease, Discount Rate | 6.00% | |||||||||
Marietta Georgia [Member] | ||||||||||
Operating Lease, Right-of-Use Asset | $ 483,565 | $ 483,565 | ||||||||
Area of Land | ft² | 9,662 | |||||||||
Arizona [Member] | ||||||||||
Area of Land | ft² | 2,362 | 2,362 | ||||||||
Georgia [Member] | Minimum | ||||||||||
Area of Land | ft² | 2,739 | |||||||||
Georgia [Member] | Maximum | ||||||||||
Area of Land | ft² | 3,831 |
CREDIT FACILITY-RELATED PARTY (
CREDIT FACILITY-RELATED PARTY (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Aug. 31, 2019 | Aug. 14, 2019 | |
Line of Credit Facility [Line Items] | |||
Warrants issued | 27,231 | 146,667 | |
Warrants exercise price | $ 6 | ||
Term of warrants | 1 year | ||
Unamortized deferred cost of warrants included in prepaid expenses and other current assets on the balance sheet | $ 182,779 | ||
Sero Capital LLC | |||
Line of Credit Facility [Line Items] | |||
Percentage of equity interests held by the related party | 10.00% | ||
Maximum borrowing capacity | $ 2,000,000 | ||
Warrants issued | 146,667 | ||
Warrants exercise price | $ 6 | ||
Term of warrants | 1 year | ||
Fair value of warrants | $ 219,335 | ||
Sero Capital LLC | Risk-free interest rate | |||
Line of Credit Facility [Line Items] | |||
Warrants and Rights Outstanding, Measurement Input | 1.86 | ||
Sero Capital LLC | Dividend yield | |||
Line of Credit Facility [Line Items] | |||
Warrants and Rights Outstanding, Measurement Input | 0 | ||
Sero Capital LLC | Volatility rate | |||
Line of Credit Facility [Line Items] | |||
Warrants and Rights Outstanding, Measurement Input | 75.9 | ||
Unsecured credit facility | Sero Capital LLC | |||
Line of Credit Facility [Line Items] | |||
Percentage of equity interests held by the related party | 10.00% | ||
Maximum borrowing capacity | $ 2,000,000 | ||
Interest rate (as a percent) | 10.00% | ||
Amounts drawn under loan agreement | $ 0 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) | 1 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Due to Related Parties | $ 4,541 | $ 14,467 |
David Moradi [Member] | ||
Professional Fees | $ 30,000 |
STOCKHOLDERS' EQUITY - Outstand
STOCKHOLDERS' EQUITY - Outstanding Options (Details) - USD ($) | Jun. 03, 2019 | Feb. 07, 2019 | Feb. 07, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Number of Options | |||||
Number of options granted | 92,939 | 28,700 | 15,596 | ||
Outstanding at the end of the period (in shares) | 11,055 | ||||
Wtd Avg. Exercise Price | |||||
Granted (in dollars per share) | $ 6.53 | ||||
Exercised (in dollars per share) | $ 10.55 | ||||
Wtd Avg. Remaining Term | |||||
Exercised Weighted Average Remaining Term | 5 years | ||||
Employee Stock Option | |||||
Number of Options | |||||
Outstanding at beginning of the period (in shares) | 997,989 | ||||
Number of options granted | 121,639 | ||||
Exercised (shares) | (37,528) | ||||
Forfeited/Expired | (178,253) | ||||
Outstanding at the end of the period (in shares) | 903,847 | 997,989 | |||
Exercisable (in shares) | 766,350 | 925,545 | |||
Wtd Avg. Exercise Price | |||||
Outstanding at beginning of the period (in dollars per share) | $ 4.67 | ||||
Granted (in dollars per share) | 7.48 | ||||
Exercised (in dollars per share) | 1.75 | ||||
Forfeited/Expired | 12.28 | ||||
Outstanding at end of the period (in dollars per share) | $ 3.67 | $ 4.67 | |||
Wtd Avg. Remaining Term | |||||
Outstanding, Wtd Average Remaining Term | 2 years 11 months 19 days | 2 years 1 month 21 days | |||
Granted Weighted Average Remaining Term | 8 years 9 months 29 days | ||||
Intrinsic Value of Options | |||||
Outstanding, Intrinsic Value (in dollars) | $ 4,705,220 | ||||
Granted, Intrinsic Value of Exercisable Options | $ 0 | ||||
Outstanding, Intrinsic Value (in dollars) | $ 1,209,562 | $ 4,705,220 |
STOCKHOLDERS' EQUITY - Outsta_2
STOCKHOLDERS' EQUITY - Outstanding Warrants (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Aug. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Number of warrants | |||
Number of shares, exercised | (1,212,136) | ||
Warrant | |||
Number of warrants | |||
Number of shares, Beginning | 1,781,715 | ||
Number of shares, granted | 146,667 | ||
Number of shares, exercised | (1,279,550) | ||
Number of shares, Forfeited | (111,511) | ||
Number of shares, Ending | 537,321 | 1,781,715 | |
Wtd Avg. Exercise Price | |||
Outstanding (in dollars per share) | $ 4.20 | ||
Granted (in dollars per share) | 6 | ||
Exercised (in dollars per share) | 1.85 | ||
Forfeited (in dollars per share) | 10.72 | ||
Outstanding (in dollars per share) | $ 7.34 | $ 4.20 | |
Wtd Avg. Remaining Term | |||
Outstanding | 10 months 24 days | 2 years 2 months 23 days | |
Granted | 1 year | ||
Intrinsic Value of Warrants | |||
Outstanding | $ 8,930,058 | ||
Outstanding | $ 63,500 | $ 8,930,058 |
STOCKHOLDERS' EQUITY - Restrict
STOCKHOLDERS' EQUITY - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] - shares | Jun. 03, 2019 | Sep. 30, 2019 |
Restricted stock units issued as of December 31, 2018 | 222,514 | |
Granted | 20,000 | 158,845 |
Total Restricted stock units issued at September 30, 2019 | 381,359 | |
Vested at September 30, 2019 | 242,514 | |
Unvested restricted stock units as of September 30, 2019 | 138,845 |
STOCKHOLDERS' EQUITY - Restri_2
STOCKHOLDERS' EQUITY - Restricted stock units, Additional Information (Details) - USD ($) | Aug. 19, 2019 | Jun. 03, 2019 | Mar. 15, 2019 | Sep. 30, 2019 |
Class of Stock [Line Items] | ||||
Vesting term | 3 years | |||
Restricted Stock Units (RSUs) [Member] | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 20,000 | 158,845 | ||
Fair value of the RSUs at grant date | $ 95,697 | $ 130,600 | $ 528,277 | |
Restricted Stock Units (RSUs) [Member] | Vest on June 3, 2020 | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 26,967 | |||
Restricted Stock Units (RSUs) [Member] | Vest on June 3, 2021 | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 26,967 | |||
Restricted Stock Units (RSUs) [Member] | Vest on June 3, 2022 | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 26,966 | |||
Restricted Stock Units (RSUs) [Member] | Director [Member] | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 11,280 | |||
Fair value of the RSUs at grant date | $ 220,975 | |||
Restricted Stock Units (RSUs) [Member] | Sachin Barot | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 80,900 | |||
Vesting term | 3 years | |||
Restricted Stock Units (RSUs) [Member] | Joel Horwitz [Member] | ||||
Class of Stock [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 24,105 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Details) - USD ($) | Jun. 03, 2019 | Feb. 07, 2019 | Feb. 07, 2019 | Aug. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Aug. 14, 2019 |
Class of Stock [Line Items] | ||||||||||
Common Stock, Shares, Issued | 8,876,555 | 8,876,555 | 7,579,995 | |||||||
Common Stock, Shares, Outstanding | 8,876,555 | 8,876,555 | 7,579,995 | |||||||
Number of options granted | 92,939 | 28,700 | 15,596 | |||||||
Exercised (in dollars per share) | $ 10.55 | |||||||||
Exercised Weighted Average Remaining Term | 5 years | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | 21,932 | |||||||||
Stock or Unit Option Plan Expense | $ 600,845 | |||||||||
Restricted Stock or Unit Expense | 202,213 | $ 32,398 | $ 760,596 | $ 336,625 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 703,174 | $ 703,174 | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 27,231 | 27,231 | 146,667 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6 | |||||||||
Weighted average exercise price | $ 6.53 | |||||||||
Term of option | 10 years | |||||||||
Vesting term | 3 years | |||||||||
Black-Scholes value on the grant date of the options | $ 571,471 | $ 258,392 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 11,055 | 11,055 | ||||||||
Stock Issued During Period Shares Stock Warrants Exercised | 1,252,319 | |||||||||
Proceeds from Warrant Exercises | $ 2,114,918 | $ 2,231,745 | ||||||||
Preferred Stock, Liquidation Preference, Value | $ 1,287,007 | $ 1,287,007 | $ 1,242,740 | |||||||
Preferred Stock, Liquidation Preference Per Share | $ 10 | $ 10 | ||||||||
Proceeds from Stock Options Exercised | $ 24,897 | |||||||||
Number of shares, exercised | 1,212,136 | |||||||||
Warrants issued | 27,231 | 27,231 | 146,667 | |||||||
Warrants exercise price | $ 6 | |||||||||
Term of warrants | 1 year | |||||||||
Employee Stock Option | ||||||||||
Class of Stock [Line Items] | ||||||||||
Expected dividend yield (as a percent) | 0.00% | |||||||||
Allocated Share-based Compensation Expense | $ 71,002 | 60,020 | $ 236,771 | 283,218 | ||||||
Warrant | ||||||||||
Class of Stock [Line Items] | ||||||||||
Allocated Share-based Compensation Expense | $ 0 | $ 110,600 | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 0 | 0 | ||||||||
Stock Issued During Period Shares Stock Warrants Exercised | 11,254 | |||||||||
Number of shares, exercised | 1,279,550 | |||||||||
Warrants issued | 0 | 0 | ||||||||
Maximum | Employee Stock Option | ||||||||||
Class of Stock [Line Items] | ||||||||||
Expected term | 6 years | |||||||||
Expected volatility (as a percent) | 156.23% | |||||||||
Risk-free interest rate (as a percent) | 2.48% | |||||||||
Minimum | Employee Stock Option | ||||||||||
Class of Stock [Line Items] | ||||||||||
Expected term | 3 years 3 months | |||||||||
Expected volatility (as a percent) | 152.58% | |||||||||
Risk-free interest rate (as a percent) | 1.83% | |||||||||
Series A Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Redemption Price (in dollars per share) | $ 4.385 | $ 4.385 | $ 4.385 | |||||||
Preferred Stock, Dividend Rate, Percentage | 5.00% | |||||||||
Dividends, Preferred Stock, Stock | $ 39,267 | |||||||||
Common Stock Dividends, Shares | 8,955 | |||||||||
Preferred stock unpaid dividend equivalent common stock, Shares | 52,909 | 43,954 | ||||||||
Dividends Payable | $ 232,007 | $ 232,007 | $ 192,740 | |||||||
Preferred Stock, Shares Issued | 105,000 | 105,000 | 105,000 | |||||||
Preferred Stock Issue Per Share | $ 10 | $ 10 | ||||||||
Warrant one | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,194,990 | |||||||||
Warrants issued | 1,194,990 | |||||||||
Warrant one | Maximum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.50 | |||||||||
Warrants exercise price | 2.50 | |||||||||
Warrant one | Minimum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | 1.63 | |||||||||
Warrants exercise price | $ 1.63 | |||||||||
Warrant two | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 85,719 | |||||||||
Warrants issued | 85,719 | |||||||||
Warrant two | Maximum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6.25 | |||||||||
Warrants exercise price | 6.25 | |||||||||
Warrant two | Minimum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | 4.07 | |||||||||
Warrants exercise price | $ 4.07 |