Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | SharpSpring, Inc. | |
Entity Central Index Key | 0001506439 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,952,954 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 13,753,942 | $ 9,320,866 |
Accounts receivable, net of allowance for doubtful accounts of $215,663 and $127,516 at September 30, 2019 and December 31, 2018, respectively | 95,498 | 80,521 |
Unbilled receivables | 927,952 | 740,425 |
Income taxes receivable | 43,813 | 22,913 |
Other current assets | 1,414,396 | 1,184,217 |
Total current assets | 16,235,601 | 11,348,942 |
Property and equipment, net | 1,880,926 | 1,260,798 |
Goodwill | 8,860,980 | 8,866,413 |
Intangible assets, net | 1,580,250 | 1,866,000 |
Right-of-use assets | 5,392,330 | 0 |
Other long-term assets | 559,186 | 665,123 |
Total assets | 34,509,273 | 24,007,276 |
Liabilities and Shareholders' Equity | ||
Accounts payable | 1,617,034 | 1,613,477 |
Accrued expenses and other current liabilities | 729,476 | 774,944 |
Deferred revenue | 508,804 | 250,656 |
Income taxes payable | 13,340 | 23,705 |
Lease liability | 362,065 | 0 |
Total current liabilities | 3,230,719 | 2,662,782 |
Convertible notes, including accrued interest | 0 | 8,342,426 |
Convertible notes embedded derivative | 0 | 214,350 |
Lease liability, net of current portion | 5,081,623 | 0 |
Total liabilities | 8,312,342 | 11,219,558 |
Commitments and contingencies (Note 11) | ||
Shareholder's equity: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding at September 30, 2019 and December 31, 2018 | 0 | 0 |
Common stock, $0.001 par value, Authorized shares-50,000,000; issued shares-10,972,426 at September 30, 2019 and 8,639,139 at December 31, 2018; outstanding shares-10,952,426 at September 30, 2019 and 8,619,139 at December 31, 2018 | 10,972 | 8,639 |
Additional paid in capital | 53,515,915 | 30,446,838 |
Accumulated other comprehensive loss | (234,103) | (231,053) |
Accumulated deficit | (27,011,853) | (17,352,706) |
Treasury stock | (84,000) | (84,000) |
Total shareholders' equity | 26,196,931 | 12,787,718 |
Total liabilities and shareholders' equity | $ 34,509,273 | $ 24,007,276 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 215,663 | $ 127,516 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common shares, par value per share | $ 0.001 | $ 0.001 |
Common shares, shares authorized | 50,000,000 | 50,000,000 |
Common shares, shares issued | 10,972,426 | 8,639,139 |
Common shares, shares outstanding | 10,952,426 | 8,619,139 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 5,723,978 | $ 4,873,329 | $ 16,567,696 | $ 13,500,281 |
Cost of services | 1,840,764 | 1,472,410 | 5,014,964 | 4,380,069 |
Gross profit | 3,883,214 | 3,400,919 | 11,552,732 | 9,120,212 |
Operating expenses: | ||||
Sales and marketing | 3,102,653 | 2,640,697 | 8,976,466 | 7,368,128 |
Research and development | 1,207,605 | 1,106,995 | 3,684,314 | 3,065,689 |
General and administrative | 1,991,329 | 1,518,106 | 6,154,295 | 4,368,744 |
Non-employee stock issuance expense | 0 | 508,561 | 0 | 508,561 |
Intangible asset amortization | 95,250 | 115,000 | 285,750 | 345,000 |
Total operating expenses | 6,396,837 | 5,889,359 | 19,100,825 | 15,656,122 |
Operating loss | (2,513,623) | (2,488,440) | (7,548,093) | (6,535,910) |
Other expense, net | (15,781) | (243,956) | (161,873) | (513,759) |
Loss on induced conversion | 0 | 0 | (2,162,696) | 0 |
Gain (loss) on embedded derivative | 0 | 27,295 | 214,350 | (426,154) |
Loss before income taxes | (2,529,404) | (2,705,101) | (9,658,312) | (7,475,823) |
Provision (benefit) for income taxes | (2,291) | 5,130 | 835 | (247,415) |
Net loss | $ (2,527,113) | $ (2,710,231) | $ (9,659,147) | $ (7,228,408) |
Basic net loss per share | $ (0.23) | $ (0.32) | $ (0.96) | $ (0.85) |
Diluted net loss per share | $ (0.23) | $ (0.32) | $ (0.96) | $ (0.85) |
Shares used in computing basic net loss per share | 10,948,416 | 8,530,858 | 10,028,246 | 8,482,976 |
Shares used in computing diluted net loss per share | 10,948,416 | 8,530,858 | 10,028,246 | 8,482,976 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | $ 2,806 | $ (30,526) | $ (3,051) | $ 243,468 |
Comprehensive loss | $ (2,524,307) | $ (2,740,757) | $ (9,662,198) | $ (6,984,940) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (9,659,147) | $ (7,228,408) |
Adjustments to reconcile loss from operations: | ||
Depreciation and amortization | 727,873 | 632,132 |
Amortization of costs to acquire contracts | 630,815 | 557,718 |
Non-cash stock compensation | 849,900 | 710,879 |
Non-employee stock issuance expense | 0 | 508,561 |
Deferred income taxes | 0 | (153,890) |
(Gain)/Loss on disposal of property and equipment | (617) | 0 |
Non-cash interest | 139,372 | 204,301 |
Amortization of debt issuance costs and embedded derivative | 2,903 | 12,991 |
(Gain)/loss on embedded derivative | (214,350) | 426,154 |
Loss on induced conversion | 2,162,696 | 0 |
Unrealized foreign currency gain/loss | 43,470 | 290,386 |
Changes in assets and liabilities: | ||
Accounts receivable | (15,014) | 40,253 |
Unbilled receivables | (189,008) | (143,716) |
Right-of-use assets | 323,180 | 0 |
Other assets | (746,774) | (773,608) |
Income taxes, net | (30,853) | 2,050,292 |
Accounts payable | 3,891 | 669,474 |
Lease liabilities | (280,643) | 27,784 |
Other liabilities | (36,639) | 0 |
Deferred revenue | 258,991 | 59,972 |
Net cash used in operating activities | (6,029,954) | (2,108,725) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,062,252) | (396,153) |
Proceeds from the sale of property and equipment | 617 | 0 |
Net cash used in investing activities | (1,061,635) | (396,153) |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible note | 0 | 8,000,000 |
Debt issuance costs | 0 | (141,657) |
Proceeds from exercise of stock options | 926,350 | 449,259 |
Proceeds (cost) from issuance of common stock, net | 10,649,005 | 0 |
Net cash provided by financing activities | 11,575,355 | 8,307,602 |
Effect of exchange rate on cash | (50,690) | (18,687) |
Change in cash and cash equivalents | 4,433,076 | 5,784,037 |
Cash and cash equivalents, beginning of period | 9,320,866 | 5,399,747 |
Cash and cash equivalents, end of period | 13,753,942 | 11,183,784 |
Supplemental information on consolidated statements of cash flows: | ||
Income taxes, net | 11,013 | (2,105,913) |
Non-cash activities Right-of-use asset obtained for lease liability | 5,715,510 | 0 |
Convertible notes liability relieved upon conversion | 8,484,701 | 0 |
Embedded derivative liability relieved upon conversion | $ 189,776 | $ 0 |
Consolidated Statment of Change
Consolidated Statment of Changes in Shareholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Loss[Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 8,456 | $ 28,362,397 | $ (480,762) | $ (84,000) | $ (7,873,883) | $ 19,932,208 |
Balance, shares at Dec. 31, 2017 | 8,456,061 | 20,000 | ||||
Stock based compensation - stock options | 575,081 | 575,081 | ||||
Issuance of common stock for cash | $ 86 | 449,173 | 449,259 | |||
Issuance of common stock for cash, shares | 85,673 | |||||
Issuance of common stock for director services | $ 21 | 150,777 | 150,798 | |||
Issuance of common stock for director services, shares | 21,054 | |||||
Issuance of common stock for other non-employee services | $ 36 | 508,525 | 508,561 | |||
Issuance of common stock for other non-employee services, shares | 36,274 | |||||
Issuance of common stock for warrant conversions | $ 10 | (10) | 0 | |||
Issuance of common stock for warrant conversions, shares | 10,412 | |||||
Foreign currency translation adjustment, net | 243,468 | 243,468 | ||||
Net loss | (7,228,408) | (7,228,408) | ||||
Balance at Sep. 30, 2018 | $ 8,609 | 30,045,943 | (237,295) | $ (84,000) | (15,102,292) | 14,630,965 |
Balance, shares at Sep. 30, 2018 | 8,609,474 | 20,000 | ||||
Balance at Jun. 30, 2018 | $ 8,528 | 29,080,351 | (365,220) | $ (84,000) | (12,392,060) | 16,247,599 |
Balance, shares at Jun. 30, 2018 | 8,527,823 | 20,000 | ||||
Stock based compensation - stock options | 192,202 | 192,202 | ||||
Issuance of common stock for cash | $ 35 | 207,419 | 207,454 | |||
Issuance of common stock for cash, shares | 35,064 | |||||
Issuance of common stock for director services | $ 5 | 57,452 | 57,457 | |||
Issuance of common stock for director services, shares | 5,184 | |||||
Issuance of common stock for other non-employee services | $ 36 | 508,525 | 508,561 | |||
Issuance of common stock for other non-employee services, shares | 36,274 | |||||
Issuance of common stock for warrant conversions | $ 5 | (5) | 0 | |||
Issuance of common stock for warrant conversions, shares | 5,129 | |||||
Foreign currency translation adjustment, net | 127,925 | 127,925 | ||||
Net loss | (2,710,232) | (2,710,231) | ||||
Balance at Sep. 30, 2018 | $ 8,609 | 30,045,943 | (237,295) | $ (84,000) | (15,102,292) | 14,630,965 |
Balance, shares at Sep. 30, 2018 | 8,609,474 | 20,000 | ||||
Balance at Dec. 31, 2018 | $ 8,639 | 30,446,838 | (231,053) | $ (84,000) | (17,352,706) | 12,787,718 |
Balance, shares at Dec. 31, 2018 | 8,639,139 | 20,000 | ||||
Stock based compensation - stock options | 746,498 | 746,498 | ||||
Issuance of common stock for cash | $ 1,070 | 11,605,224 | 11,606,294 | |||
Issuance of common stock for cash, shares | 1,070,184 | |||||
Issuance of common stock for director services | $ 7 | 95,895 | 95,902 | |||
Issuance of common stock for director services, shares | 6,696 | |||||
Issuance of common stock for warrant conversions | $ 15 | (15) | 0 | |||
Issuance of common stock for warrant conversions, shares | 14,772 | |||||
Issance of commons stock for settlement of notes | $ 1,242 | 10,621,474 | 10,622,716 | |||
Issance of commons stock for settlement of notes, shares | 1,241,635 | |||||
Foreign currency translation adjustment, net | (3,051) | (3,051) | ||||
Net loss | (9,659,147) | (9,659,147) | ||||
Balance at Sep. 30, 2019 | $ 10,972 | 53,515,915 | (234,103) | $ (84,000) | (27,011,853) | 26,196,931 |
Balance, shares at Sep. 30, 2019 | 10,972,426 | 20,000 | ||||
Balance at Jun. 30, 2019 | $ 10,966 | 53,211,881 | (229,620) | $ (84,000) | (24,484,741) | 28,424,486 |
Balance, shares at Jun. 30, 2019 | 10,965,794 | 20,000 | ||||
Stock based compensation - stock options | 252,799 | 252,799 | ||||
Issuance of common stock for cash | $ 4 | 27,228 | 27,232 | |||
Issuance of common stock for cash, shares | 4,292 | |||||
Issuance of common stock for director services | $ 2 | 24,006 | 24,008 | |||
Issuance of common stock for director services, shares | 2,340 | |||||
Foreign currency translation adjustment, net | (4,484) | (4,484) | ||||
Net loss | (2,527,113) | (2,527,113) | ||||
Balance at Sep. 30, 2019 | $ 10,972 | $ 53,515,915 | $ (234,103) | $ (84,000) | $ (27,011,853) | $ 26,196,931 |
Balance, shares at Sep. 30, 2019 | 10,972,426 | 20,000 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | SharpSpring, Inc. (the “Company”) provides a cloud-based marketing automation solution. SharpSpring is designed to increase the rates at which businesses generate leads and convert leads to sales opportunities by improving the way businesses communicate with customers and prospects. Our products are marketed directly by us and through a small group of reseller partners to customers around the world. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation and Consolidation The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) applicable to interim periods, under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of our management, Company has prepared the accompanying unaudited consolidated financial statements on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2018, and these consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. Our Consolidated Financial Statements include the accounts of SharpSpring, Inc. and our subsidiaries (the “Company”). Our Consolidated Financial Statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2019. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating Segments The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. The Company does not present geographical information about revenues because it is impractical to do so. Foreign Currencies The functional currency of the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at the average exchange rates during the period. Foreign currency translation gains and losses are recorded in other comprehensive income (loss). Cash and Cash Equivalents Cash equivalents are short-term, liquid investments with remaining maturities of three months or less when acquired. Cash and cash equivalents are deposited or managed by major financial institutions and at most times are in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits. Fair Value of Financial Instruments U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, embedded derivatives (associated with our convertible notes) and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these items. The fair value of the embedded derivatives associated with our convertible notes is calculated using Level 3 unobservable inputs, utilizing a probability-weighted expected value model to determine the liability. The fair value of the embedded derivatives at September 30, 2019, and December 31, 2018, was a liability balance of zero and $214,350, respectively. The change in fair value for the three months ended September 30, 2019, and 2018 was zero and a gain of $27,295, respectively. The change in fair value for the nine months ended September 30, 2019, and 2018, was a gain of $214,350 and a loss of $426,154, respectively. Accounts Receivable Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance. In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset. A portion of our accounts receivable balance is therefore unbilled at each balance sheet date and is reflected as such on the consolidated balance sheet. Intangibles Finite-lived intangible assets include trade names, developed technologies, and customer relationships and are amortized based on the estimated economic benefit over their estimated useful lives, with original periods ranging from 5 to 11 years. We continually evaluate the reasonableness of the useful lives of these assets. Finite-lived intangibles are tested for recoverability whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. Impairment losses are measured as the amount by which the carrying value of an asset group exceeds its fair value and are recognized in operating results. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments, and the fair value of an asset group. The dynamic economic environment in which the Company operates, and the resulting assumptions used to estimate future cash flows impact the outcome of these impairment tests. Goodwill and Impairment As of September 30, 2019, and December 31, 2018, we had recorded goodwill of $8,860,980 and $8,866,413, respectively. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired in the SharpSpring and GraphicMail acquisitions. Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350, “Intangibles - Goodwill and Other” Debt Issuance Costs Third-party costs associated with the issuance of debt are included as a direct reduction to the carrying value of the debt and are amortized to interest expense ratably over the life of the debt. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB ASC 740, Simplifying the Accounting for Income Taxes The Company applies the authoritative guidance in accounting for uncertainty in income taxes recognized in the consolidated financial statements. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. There are no material uncertain tax positions taken by the Company on its tax returns. Tax years subsequent to 2015 remain open to examination by U.S. federal and state tax jurisdictions. In determining the provision for income taxes, the Company uses statutory tax rates and tax planning opportunities available to the Company in the jurisdictions in which it operates. This includes recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns to the extent pervasive evidence exists that they will be realized in future periods. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which are expected to be in effect in the years in which the temporary differences are expected to reverse. In accordance with the Company’s income tax policy, significant or unusual items are separately recognized in the period in which they occur. The Company is subject to routine examination by domestic and foreign tax authorities and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions. As of September 30, 2019, the Company is being examined by the U.S. tax authorities related to the 2016 and 2017 tax years. The Company does not expect any material adjustments as a result of the audits. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. Depreciation expense related to property and equipment was $161,105 and $125,416 for the three months ended September 30, 2019, and 2018, respectively. Depreciation expense related to property and equipment was $442,123 and $287,132 for the nine months ended September 30, 2019, and 2018, respectively. Repairs and maintenance costs are expensed as incurred. Property and equipment as of September 30, 2019 and December 31, 2018, is as follows: September 30, December 31, 2019 2018 Property and equipment, gross: Leasehold improvements $ 289,565 $ 197,268 Furniture and fixtures 675,104 611,171 Computer equipment and software 2,053,045 1,135,012 Total 3,017,714 1,943,451 Less: Accumulated depreciation and amortization (1,136,788 ) (682,653 ) $ 1,880,926 $ 1,260,798 Useful lives are as follows: Leasehold improvements 3-5 years Furniture and fixtures 3-5 years Computing equipment 3 years Software 3-5 years Revenue Recognition The Company recognizes revenue from its services when it is probable that the economic benefits associated with the transactions will flow to the Company and the amount of revenue can be reliably measured. All significant sources of revenue are the result of a contract with a customer, and as such meet the requirements of recognizing revenue in accordance with FASB ASC 606. For the three months ended September 30, 2019, and 2018, revenue from contracts with customers was $5.7 million and $4.9 million, respectively. For the nine months ended September 30, 2019, and 2018, revenue from contracts with customers was $16.6 million and $13.5 million, respectively. For the Company’s internet-based SharpSpring marketing automation solution, the services are typically offered on a month-to-month basis with a fee charged each month depending on the size of the engagement with the customer. Monthly fees are recorded as revenue during the month they are earned. Some customers are charged annually in advance, for which revenues are deferred and recorded ratably over the subscription period. The Company also charges transactional-based fees if monthly volume limitations are reached or other chargeable activity occurs. Additionally, customers are typically charged an upfront onboarding and training fee. The upfront onboarding and training fees represent short-term “use it or lose it” services offered for a flat fee. Such flat fees are recognized over the service period, which is typically 60 days. For the SharpSpring Mail+ product, the services are typically offered on a month-to-month basis. Customers are either charged in arrears based on the number of contacts in the system during the billing period or in advance if the customer selects a plan based on e-mail volume. The Company also charges transactional-based fees if monthly volume limitations are reached or other chargeable activity occurs. Our products are billed in arrears or upfront, depending on the product, which creates contract assets (unbilled receivables) and contract liabilities (deferred revenue). Contract assets occur due to unbilled charges for which the Company has satisfied performance obligations. Contract liabilities occur due to upfront billed charges for which the Company has not yet fully satisfied all performance obligations. Both contract assets and liabilities are recognized and deferred ratably over their service periods. The Company makes judgements when determining revenue recognition. Because many of our contracts are billed in arrears, estimates are made for the transaction price and amounts allocated to each accounting period related to the performance obligations of each contract. There have been no changes to the methodology used in these judgements and estimates for determining revenues. Some of the estimates used when determining revenue recognition relate to variable customer consideration that changes from month to month. The Company uses the most likely amount method to determine the estimated variable consideration, relying on historical consideration received, customer status and projected usage to determine the most likely consideration amount. The amount of variable consideration recognized is constrained and is only included in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. The performance obligations are measured using the output method to recognize revenue based on direct measurements of the value to the customer of the services transferred to date. Most of the Company’s contracts have a predefined service period and are therefore satisfied over that period. This allows for a reliable way to measure performance obligations remaining and completed. The Company does have some contracts that are satisfied at a point in time upon delivery of services. The criteria for the completion of these contracts are defined in each contract with a customer so that there is no judgment required to evaluate when the service is delivered to the customer. Any discount given is allocated to the performance obligation and is treated as a reduction to the transaction price. Due to the month to month nature of the Company’s contracts with customers, no financing or time value of money component exists related to the contracts with customers. Due to the month to month nature of the Company’s contracts with customers, we have elected to utilize the optional practical expedient from ASC 606-10-50-14 through 50-14A for disclosing the remaining performance obligations. The remaining performance obligations as of the balance sheet date consist of initial implementation and availability and use of the SharpSpring platform. Remaining implementation obligations typically are provided over a period of 30 days or less as of the balance sheet date. Remaining obligations of availability of the platform are provided over a period ranging from less than 30 days to 12 months as of the balance sheet date. From time to time, the Company offers refunds to customers and experiences credit card chargebacks relating to cardholder disputes that are commonly experienced by businesses that accept credit cards. The Company makes estimates for refunds and credit card chargebacks based on historical experience. Deferred Revenue Deferred revenue consists of payments received in advance of the Company’s providing the services. Deferred revenue is earned over the service period identified in each contract. The majority of our deferred revenue balances (contract liabilities) arise from payments from customers in advance of service on a periodic basis (such as monthly, quarterly, annually or bi-annually). In situations where a customer pays in advance, the deferred revenue is recognized over the service period defined in the contract. Additionally, the Company has deferred revenue related to implementation fees for its SharpSpring marketing automation solution that are paid in advance. These implementation services are typically performed over a 60-day period, and the revenue is recognized over that period. Deferred revenue balances were $250,656 and $279,818 as of December 31, 2018, and 2017, respectively. Deferred revenue during the three months ended September 30, 2019, and 2018, increased by $191,727 and $19,833, respectively. Deferred revenue during the nine months ended September 30, 2019, and 2018, increased by $258,147 and $58,601, respectively. The Company had deferred revenue contract liability balances of $508,804 and $250,656 as of September 30, 2019, and December 31, 2018, respectively. The Company expects to recognize a majority of the revenue of these remaining performance obligations within 12 months. Approximately 7% of the deferred revenue balance is related to prepaid credits. These credits are recognized as they are used. The Company expects to recognize approximately half of the remaining prepaid credits within 12 months. Accrued Revenue In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating an unbilled receivable. A portion of our revenue is therefore unbilled at each period. The accrued revenue balances were $740,425 and $554,603 as of December 31, 2018, and 2017, respectively. Revenue billed that was included in accrued revenue at the beginning of the period for the three months ending September 30, 2019, and 2018, was $880,333 and $646,452, respectively. Revenue billed that was included in accrued revenue at the beginning of the period for the nine months ending September 30, 2019, and 2018, was $740,425 and $554,603, respectively. Accrued revenue not billed in the three and nine months ending September 30, 2019, and 2018, was $927,952 and $697,101, respectively. The Company had accrued revenue balances of $927,952and $740,425 as of September 30, 2019, and December 31, 2018, respectively. Concentration of Credit Risk and Significant Customers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. At September 30, 2019, and December 31, 2018, the Company had cash balances at financial institutions that exceed federally insured limits. The Company maintains its cash balances with accredited financial institutions. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. There were no customers that accounted for more than 10% of total revenue or 10% of total accounts receivable for any financial period presented. Cost of Services Cost of services consists primarily of direct labor costs associated with support, customer onboarding, account management, and technology hosting and license costs associated with the cloud-based platform. Credit Card Processing Fees Credit card processing fees are included as a component of general and administrative expenses and are expensed as incurred. Advertising Costs The Company expenses advertising costs as incurred. Advertising and marketing expenses, excluding marketing team costs, were $1,525,322 and $1,443,534 for the three months ended September 30, 2019, and 2018, respectively. Advertising and marketing expenses, excluding marketing team costs, were $4,556,539 and $4,187,234 for the nine months ended September 30, 2019, and 2018, respectively. Capitalized Cost of Obtaining a Contract The Company capitalizes sales commission costs which are incremental to obtaining a contract. We expense costs that are related to obtaining a contract but that are not incremental, such as other sales and marketing costs and costs that would be incurred regardless of a contract being obtained. Capitalized costs are amortized using the straight-line amortization over the estimated weighted average life of the customer, which we have estimated to be 3 years. At September 30, 2019, the net carrying value of the capitalized cost of obtaining a contract was $1,209,280, of which $686,255 is included in other current assets and $523,025 is included in other long-term assets. At December 31, 2018, the net carrying value of the capitalized cost of obtaining a contract was $1,309,329, of which $699,159 is included in other current assets and $610,170 is included in other long-term assets. The Company amortized expenses for the costs of obtaining contracts of $199,058 and $194,479 for the three months ended September 30, 2019, and 2018, respectively. The Company amortized expenses for the costs of obtaining contracts of $630,815 and $557,718 for the nine months ended September 30, 2019, and 2018, respectively. Stock Compensation We account for stock-based compensation in accordance with FASB ASC 718 Compensation — Stock Compensation, Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents for the period. For purposes of this calculation, options to purchase common stock, warrants, and the conversion option of the convertible Notes (Note 5) are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. Comprehensive Income (Loss) Comprehensive income or loss includes all changes in equity during a period from non-owner sources, such as net income or loss and foreign currency translation adjustments. Recently Issued Accounting Standards Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of operations. In January 2017, the FASB issued guidance simplifying the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. Under current guidance, Step 2 of the goodwill impairment test requires entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value is recognized as goodwill impairment. Under the new standard, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. The new standard is effective beginning in January 2020, with early adoption permitted. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. The guidance became effective for the Company on January 1, 2019. The Company is using the modified retrospective transition method which allows the Company to recognize and measure leases as of the adoption date, January 1, 2019, with the cumulative impact being reflected in the opening balance of retained earnings. The application of the modified retrospective transition was applied to all active leases at the date of initial application. There was no impact to the Company’s retained earnings for the implementation of this accounting standard. The following tables present the cumulative impact on our financial statements upon adoption. Impact upon adoption of new ASU As of January 1, 2019 Right-of-use assets 5,715,510 Total Assets $ 5,715,510 Accrued expenses and other current liabilities $ (8,821 ) Lease liability (current) 344,883 Lease liability (non-current) 5,379,448 Total Liabilities $ 5,715,510 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Intangible assets are as follows: As of September 30, 2019 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 120,000 (120,000 ) $ - Technology 2,130,000 (1,132,500 ) 997,500 Customer relationships 1,320,000 (737,250 ) 582,750 Unamortized intangible assets: 3,570,000 (1,989,750 ) 1,580,250 Goodwill 8,860,980 Total goodwill and intangible assets $ 10,441,230 As of December 31, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 120,000 (120,000 ) $ - Technology 2,130,000 (954,000 ) 1,176,000 Customer relationships 4,100,014 (3,410,014 ) 690,000 Unamortized intangible assets: 6,350,014 (4,484,014 ) 1,866,000 Goodwill 8,866,413 Total goodwill and intangible assets $ 10,732,413 Estimated amortization expense for the remainder of 2019 and subsequent years is as follows: Remainder of 2019 95,250 2020 332,000 2021 280,000 2022 228,000 2023 180,000 2024 141,000 Thereafter 324,000 Total $ 1,580,250 Amortization expense for the three months ended September 30, 2019 and 2018, was $95,250 and $115,000, respectively. Amortization expense for the nine months ended September 30, 2019 and 2018, was $285,750 and $345,000, respectively. |
Credit Facility
Credit Facility | 9 Months Ended |
Sep. 30, 2019 | |
Line of Credit Facility [Abstract] | |
Credit Facility | In March 2016, the Company entered into a $2.5 million revolving loan agreement (the “Credit Facility”) with Western Alliance Bank. The facility originally matured on March 21, 2018 and was amended to mature on March 31, 2020. There are no mandatory amortization provisions and the Credit Facility is payable in full at maturity. As of September 30, 2019, the credit facility carried an interest rate of 6.75%. The Credit Facility is collateralized by a lien on substantially all of the existing and future assets of the Company and secured by a pledge of 100% of the capital stock of SharpSpring Technologies, Inc. and a 65% pledge of the Company’s foreign subsidiaries’ stock. The Credit Facility subjects the Company to a number of restrictive covenants, including financial and non-financial covenants customarily found in loan agreements for similar transactions. The Credit Facility also restricts our ability to pay cash dividends on our common stock. There are no amounts outstanding under the Credit Facility and no events of default have occurred. |
Convertible Notes
Convertible Notes | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Notes | On March 28, 2018, we issued $8.0 million in aggregate principal amount of convertible notes (the “Note”). Interest accrued at a rate of 5.0% per year and was “payable in kind” annually in the form of the issuance of additional Notes (“PIK Notes” and, together with Note, the “Notes”). The principal amount of the Notes and the PIK Notes were due and payable in full on the fifth anniversary of the date of the Notes. The Company had the right to extend the maturity date for up to nine months on up to three separate occasions, with interest accruing at a rate of 10% during any such extension periods. The Notes were convertible into shares of the Company’s common stock at any time by the holder at a fixed conversion price of $7.50 per share, subject to customary adjustments for specified corporate events. Additionally, if the Notes and PIK Notes were not converted into common stock by the holder, at the maturity date, the Company may elect to convert all outstanding Notes and PIK Notes into shares of the Company’s common stock at a conversion price equal to 80% of the volume weighted average closing price of the Company’s common stock for the 30 trading days prior to and including the maturity date. We received net proceeds from the offering of approximately $7.9 million after adjusting for debt issue costs, including financial advisory and legal fees. The Notes were unsecured obligations and were subordinate in right of payment to the Credit Facility (Note 4). So long as any Notes were outstanding, except as the investor may otherwise agree in writing, the Company at no time (i) was to have outstanding senior indebtedness in an aggregate amount exceeding 18.6% of the Company’s trailing twelve month revenue, (ii) incur any indebtedness that is both junior in right of payment to the obligations of the Company to its senior secured lender and senior to the Company’s obligations under the Notes or (iii) enter into any agreement with any lender or other third party that would (A) prohibit the Company from issuing PIK Notes at any time or under any circumstances or (B) prohibit the conversion of the Notes in accordance with their terms at any time or under any circumstances. Prior to the issuance of the Notes, the Company had no outstanding indebtedness for borrowed money. The holder of the Notes must notify the Company at least 120 days prior to the maturity of the Notes of its election to convert the Notes. The convertible Notes agreement contained customary events of default with respect to the Notes and provided that upon certain events of default occurring and continuing, the investor, by written notice to the Company may declare the entire outstanding principal amount of the Notes and all accrued but unpaid interest to be immediately due and payable. During the continuance of an event of default, the investor had recourse to any and all remedies available under applicable law. The Notes were recorded upon issuance at amortized cost in accordance with applicable accounting guidance. As there was no difference in the amount recorded at inception and the face value of the Notes, interest expense was accreted at the stated interest rate under the terms of the Notes. Total interest expense related to the Notes was impacted by the amortization of the debt issuance cost using the effective interest method. The Company was required to accelerate and issue the PIK Notes through the maturity of the Notes if the Company elected to convert the Notes prior to maturity (which it can do upon certain conditions) or if there was a change in control. Pursuant to accounting guidance, for each of these situations, the Company determined that the economic characteristics of these “make whole” features were not considered clearly and closely related to the Company’s stock. Accordingly, these features were determined to be “embedded derivatives” and were bifurcated from the Notes and separately accounted for on a combined basis at fair value as a single derivative. The fair value of the derivatives was zero as of September 30, 2019. The derivative was accounted for at fair value, with subsequent changes in the fair value to be reported as part of Other income (expense), net in the Consolidated Statement of Operations. Additionally, the investor’s conversion option was analyzed for embedded derivative treatment, but the conversion option qualified for a scope exception as it was considered to be clearly and closely related to the Company’s stock. On May 9, 2019, the Company entered into and made effective a Note Conversion Agreement (the “Conversion Agreement”) with SHSP Holdings, LLC (“SHSP Holdings”) and Evercel Holdings, LLC (“Evercel,” and together with SHSP Holdings, the “Investor”), pursuant to which the parties agreed to the conversion (the “Conversion”) of the Notes. The Company’s entry into the Conversion Agreement was unanimously approved by the disinterested members of the Company’s Board of Directors. Under the Conversion Agreement, the Notes were deemed to have been converted into the Conversion Shares, and any interest in any amount ceased to accrue or be payable with respect to the Notes, and SHSP Holdings ceases to be a holder of any Notes, and the Notes cease to be outstanding, for purposes of the Investors’ Rights Agreement dated as of March 28, 2018. Effective as of the issuance and delivery of the Conversion Shares to SHSP Holdings, the Notes were canceled and terminated in their entirety and of no further force and effect, and any and all indebtedness and other obligations of the Company under the Notes was fully performed and discharged, and any and all claims or rights of SHSP Holdings or its affiliates thereunder were fully and finally extinguished and released. Additionally, under the terms of the Conversion Agreement, the Company agreed to pay in shares 49% of the remaining future interest totaling 115,037 shares. As a result of accelerating the 49% of future interest along with the extinguishment of the convertible notes, the Company incurred a loss on conversion of debt of $2.2 million. The loss was measured as the excess fair value of the shares issued under the modified conversion, compared to the fair value of the shares that would have been issued under an unmodified conversion as of the measurement date. Level 1 inputs were used to determine the fair value of the shares paid to the Investor. The loss on conversion was partially offset by a gain of $189,776 from the write-off of the embedded derivative liability. The net carrying amount of the Notes at September 30, 2019 was as follows: September 30, December 31, 2019 2018 Principal amount $ - $ 8,000,000 Accrued interest paid-in-kind - 304,301 Unamortized debt issuance costs - (122,153 ) Unamortized embedded derivative - 160,278 Net carrying value $ - $ 8,342,426 We incurred certain third-party costs in connection with our issuance of the Notes, principally related to financial advisory and legal fees, which were amortized to interest expense ratably over the five-year term of the Notes. Upon conversion on May 9, 2019, all remaining issuance costs were fully expensed. The following table sets forth total interest expense related to the Notes for the three and nine month ended September 30, 2019, and 2018: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Contractual interest paid-in-kind expense (non-cash) $ - $ 100,000 $ 139,372 $ 204,301 Amortization of debt issuance costs (non-cash) - 6,359 15,108 12,991 Amortization of embedded derivative (non-cash) - - (12,205 ) - Total interest expense $ - $ 106,359 $ 142,275 $ 217,292 Effective interest rate 0.0 % 5.3 % 4.9 % 5.3 % |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 6: Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents for the period. For purposes of this calculation, options to purchase common stock, warrants and the conversion option of the Convertible Notes (Note 5) are considered to be potential common shares outstanding. Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net loss $ (2,527,113 ) $ (2,710,231 ) $ (9,659,147 ) $ (7,228,408 ) Basic weighted average common shares outstanding 10,948,416 8,530,858 10,028,246 8,482,976 Add incremental shares for: Warrants - - - - Stock options - - - - Convertible notes - - - - Diluted weighted average common shares outstanding 10,948,416 8,530,858 10,028,246 8,482,976 Net loss per share: Basic $ (0.23 ) $ (0.32 ) $ (0.96 ) $ (0.85 ) Diluted $ (0.23 ) $ (0.32 ) $ (0.96 ) $ (0.85 ) Additionally, since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s outstanding warrants, stock options, and convertible notes were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. The following table contains all potentially dilutive common stock equivalents: Three and Nine Months Ended September 30, 2019 2018 Warrants - 30,000 Stock options 1,419,844 1,475,689 Convertible notes - 1,093,907 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The income tax expense we record in any interim period is based on our estimated effective tax rate for the year for each jurisdiction that we operate in. The calculation of our estimated effective tax rate requires an estimate of pre-tax income by tax jurisdiction, as well as total tax expense for the fiscal year. Accordingly, this tax rate is subject to adjustment if, in subsequent interim periods, there are changes to our initial estimates of total tax expense, pre-tax income, or pre-tax income by jurisdiction. During the three months ended September 30, 2019, and 2018, the Company recorded income tax benefit of $2,291 and income tax expense of $5,130, respectively, from operations. During the nine months ended September 30, 2019, and 2018, the Company recorded income tax expense of $835 and income tax benefit of $247,415, respectively, from operations. The blended effective tax rate for the nine months ending September 30, 2019, and 2018, was 0.0% and 3.0%, respectively. The effective blended tax rate varies from our statutory U.S. tax rate due to valuation allowances on losses and income generated in certain other jurisdictions at various tax rates. Valuation Allowance We record a deferred tax asset if we believe that it is more likely than not that we will realize a future tax benefit. Ultimate realization of any deferred tax asset is dependent on our ability to generate sufficient future taxable income in the appropriate tax jurisdiction before the expiration of carryforward periods, if any. Our assessment of deferred tax asset recoverability considers many different factors including historical and projected operating results, the reversal of existing deferred tax liabilities that provide a source of future taxable income, the impact of current tax planning strategies, and the availability of future tax planning strategies. We establish a valuation allowance against any deferred tax asset for which we are unable to conclude that recoverability is more likely than not. This is inherently judgmental since we are required to assess many different factors and evaluate as much objective evidence as we can in reaching an overall conclusion. The particularly sensitive component of our evaluation is our projection of future operating results since this relies heavily on our estimates of future revenue and expense levels by tax jurisdiction. In making our assessment of deferred tax asset recoverability, we considered our historical financial results, our projected future financial results, the planned reversal of existing deferred tax liabilities and the impact of any tax planning actions. Based on our analysis we noted both positive and negative factors relative to our ability to support realization of certain deferred tax assets. However, based on the weighting of all the evidence, including the near term effect on our income projections of investments we are making in our team, product and systems infrastructure, we concluded that it was more likely than not that the majority of our deferred tax assets related to temporary differences and net operating losses may not be recovered. The establishment of a valuation allowance has no effect on our ability to use the underlying deferred tax assets prior to expiration to reduce cash tax payments in the future to the extent that we generate taxable income. At September 30, 2019, and December 31, 2018, we have established a valuation allowance of $6.5 million and $4.3 million, respectively, against certain deferred tax assets given the uncertainty of recoverability of these amounts. |
Defined Contribution Retirement
Defined Contribution Retirement Plan | 9 Months Ended |
Sep. 30, 2019 | |
Retirement Benefits [Abstract] | |
Defined Contribution Retirement Plan | Starting in 2016, we offered our U.S. employees the ability to participate in a 401(k) plan. Eligible U.S. employees may contribute up to 99% of their eligible compensation, subject to limitations established by the Internal Revenue Code. The Company contributes a matching contribution equal to 100% of each such participant’s contribution up to the first 3% of their annual eligible compensation. We charged $78,040 and $64,679 to expense in the three months ended September 30, 2019, and 2018, respectively, associated with our matching contribution in those periods. We charged $229,248 and $186,614 to expense in the nine months ended September 30, 2019, and 2018, respectively, associated with our matching contribution in those periods. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | The Company grants stock option awards to officers and employees and grants stock awards to directors as compensation for their service to the Company. In November 2010, the Company adopted the 2010 Stock Incentive Plan (the “2010 Plan”) which was amended in April 2011, August 2013, April 2014, February 2016, March 2017, and June 2018. The plan was restated in its entirety in August 2018. As amended, up to 2,600,000 shares of common stock are available for issuance under the Plan. The Plan provides for the issuance of stock options and other stock-based awards. In April 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). No more than 697,039 shares of common stock, plus the number of shares of common stock underlying any award granted under the 2010 Plan that expires, terminates, is canceled, or is forfeited shall be available for grant under the 2019 Plan. The Plan provides for the issuance of stock options and other stock-based awards. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards. Stock Options Stock option awards under the 2010 Plan and 2019 Plan (the “Plans”) have a 10-year maximum contractual term and must be issued at an exercise price of not less than 100% of the fair market value of the common stock at the date of grant. The Plans are administered by the Board of Directors, which has the authority to determine to whom options may be granted, the period of exercise, and what other restrictions, if any, should apply. Vesting for awards granted to date under the Plans is principally over four years from the date of the grant, with 25% of the award vesting after one year and monthly vesting thereafter. Option awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures, using a Black-Scholes option pricing model with the following assumptions: Nine months ended September 30, 2019 2018 Volatility 49%-50% 48%-49% Risk-free interest rate 1.45%-2.59% 2.34%-2.99% Expected term 6.25 years 6.25 years The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2019, and 2018, was $6.43 and $2.88, respectively. Stock option awards are expensed on a straight-line basis over the requisite service period. During the three months ended September 30, 2019, and 2018, the Company recognized an expense of $252,799 and $192,202, respectively, associated with stock option awards. During the nine months ended September 30, 2019, and 2018, the Company recognized an expense of $746,498 and $575,081, respectively, associated with stock option awards. At September 30, 2019, future stock compensation expense associated with stock options (net of estimated forfeitures) not yet recognized was $2,959,018 and will be recognized over a weighted average remaining vesting period of 3.1 years. The following summarizes stock option activity for the nine months ended September 30, 2019: Weighted Weighted Aggregate Number of Average Average Remaining Intrinsic Options Exercise Price Contractual Life Value Outstanding at December 31, 2018 1,654,522 $ 6.07 8.2 $ 10,866,658 Granted 166,294 12.77 Exercised (185,212 ) 5.06 Expired (1,198 ) 5.18 Forfeited (214,562 ) 5.08 Outstanding at September 30, 2019 1,419,844 $ 7.14 7.6 $ 4,773,655 Exercisable at September 30, 2019 718,990 $ 5.14 6.6 $ 3,310,784 The total intrinsic value of stock options exercised during the three months ended September 30, 2019, and 2018, were zero and $246,672, respectively. The total intrinsic value of stock options exercised during the nine months ended September 30, 2019, and 2018, were $1,432,655 and $404,273, respectively. Stock Awards During the three months ended September 30, 2019, and 2018, the Company issued 2,340 and 5,184 shares, respectively, to non-employee directors as compensation for their service on the board. During the nine months ended September 30, 2019, and 2018, the Company issued 6,696 and 21,054 shares, respectively, to non-employee directors as compensation for their service on the board Such stock awards are immediately vested. Stock awards are valued based on the closing price of our common stock on the date of grant, and compensation cost is recorded on a straight-line basis over the share vesting period. The total fair value of stock awards granted, vested, and expensed during the three months ended September 30, 2019, and 2018, was $31,508 and $57,457, respectively. The total fair value of stock awards granted, vested, and expensed during the nine months ended September 30, 2019, and 2018, was $103,402 and $143,268, respectively. As of September 30, 2019, there was no unrecognized compensation cost related to stock awards. Additionally, during the three months ended September 30, 2018, the Company issued 36,274 shares to a service provider to satisfy a performance-based contractual arrangement. The Company recorded an expense of approximately $509,000 associated with this issuance in the third quarter of 2018. These shares were not issued from the 2010 Stock Incentive Plan. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | During 2014, the Company issued warrants to certain service providers. The following table summarizes information about the Company’s warrants at September 30, 2019: Weighted Weighted Number of Average Average Remaining Intrinsic Units Exercise Price Contractual Term Value Outstanding at December 31, 2018 30,000 $ 7.81 1.1 $ 144,525 Granted - - Exercised (30,000 ) 7.81 Cancelled - - Outstanding at September 30, 2019 - $ - - $ - Exercisable at September 30, 2019 - $ - - $ - |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | The Company may from time to time be involved in legal proceedings arising from the normal course of business. The Company is not currently a party to any litigation of a material nature. The Company has employment agreements with several members of its leadership team and executive officers. The Company is not party to any non-cancellable contracts that create a material future commitment other than its lease as described in Note 12. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | The Company currently rents its primary office facility under a ten-year lease which started in November 2018 (the “2018 Lease”). The term of the lease may be extended for an additional 5 years in incremental one-year periods, subject to certain conditions described in the 2018 Lease. In June 2019, the Company entered into an addendum agreement to the 2018 Lease (the “2019 Addendum”) to lease an additional approximately 18,000 square feet of office space located on the same premises as the 2018 Lease. The term of the addendum extends through the same period as the 2018 Lease. The base rent for the first full year of the 2019 addendum is approximately $395,000. We do not assume renewals in our determination of lease term unless the renewals are deemed to be reasonably assured at lease commencement. At the commencement of the 2018 lease, renewal was not reasonably assured. Determination of whether a contract contains a lease is determined at execution of the contract based on the facts of each contract. The Company elected the package of practical expedients permitted under ASC 842 which allows us to carryforward historical lease classification, assessment on whether a contract was or contains a lease, and initial direct costs for any leases that existed prior to adoption of the standard. We have also elected to utilize practical expedients to combine lease and non-lease components and to not include on the balance sheet leases with an initial term of 12 months or less (“short-term leases”). Short-term lease payments are recognized in the consolidated statements of income on a straight-line basis over the lease term. These practical expedients apply to all of SharpSpring’s operating leases. The Company is not party to any financing lease. The weighted average remaining lease term as of September 30, 2019, is 9.2 years. The weighted average discount rate for our operating leases as of September 30, 2019 is 6.5%. The discount rate of each lease is determined by the company’s incremental borrowing rate at the time of a lease contract. The lease cost associated with short-term leases for the three months ended September 30, 2019, and 2018, were zero and $19,210 respectively. The lease cost associated with short-term leases for the nine months ended September 30, 2019, and 2018, were zero and $57,072 respectively. Future minimum lease payments are as follows as of September 30, 2019: Operating Leases Remainder of 2019 184,560 2020 742,956 2021 766,546 2022 771,278 2023 794,937 Thereafter 4,020,754 Total undiscounted cash flows $ 7,281,032 Less imputed interest (1,837,344 ) Present value of lease liability $ 5,443,688 |
Disaggregation of Revenue
Disaggregation of Revenue | 9 Months Ended |
Sep. 30, 2019 | |
Disaggregation of Revenue [Abstract] | |
Disaggregation of Revenue | The Company operates as one reporting segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision makers (“CODM”), which is the Company’s chief executive office, in deciding how to allocate resources and assess performance. The Company does not present geographical information about revenues because it is impractical to do so. Disaggregated revenue for the three and nine months ended September 30, 2019, and 2018, are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue by Product: Marketing Automation Revenue 5,676,555 4,793,467 16,389,475 13,176,124 Mail + Product Revenue $ 47,423 $ 79,862 $ 178,221 $ 324,157 Total Revenue $ 5,723,978 $ 4,873,329 $ 16,567,696 $ 13,500,281 Revenue by Type: Recurring Revenue 5,391,989 4,420,872 15,384,507 12,331,999 Upfront Fees $ 331,989 $ 452,457 $ 1,183,189 $ 1,168,282 Total Revenue $ 5,723,978 $ 4,873,329 $ 16,567,696 $ 13,500,281 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) applicable to interim periods, under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of our management, Company has prepared the accompanying unaudited consolidated financial statements on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2018, and these consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. Our Consolidated Financial Statements include the accounts of SharpSpring, Inc. and our subsidiaries (the “Company”). Our Consolidated Financial Statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2019. |
Use of Estimates | The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Operating Segments | The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. The Company does not present geographical information about revenues because it is impractical to do so. |
Foreign Currencies | The functional currency of the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at the average exchange rates during the period. Foreign currency translation gains and losses are recorded in other comprehensive income (loss). |
Cash and Cash Equivalents | Cash equivalents are short-term, liquid investments with remaining maturities of three months or less when acquired. Cash and cash equivalents are deposited or managed by major financial institutions and at most times are in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits. |
Fair Value of Financial Instruments | U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, deposits, embedded derivatives (associated with our convertible notes) and accounts payable. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these items. The fair value of the embedded derivatives associated with our convertible notes is calculated using Level 3 unobservable inputs, utilizing a probability-weighted expected value model to determine the liability. The fair value of the embedded derivatives at September 30, 2019, and December 31, 2018, was a liability balance of zero and $214,350, respectively. The change in fair value for the three months ended September 30, 2019, and 2018 was zero and a gain of $27,295, respectively. The change in fair value for the nine months ended September 30, 2019, and 2018, was a gain of $214,350 and a loss of $426,154, respectively. |
Accounts Receivable | Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. The Company reserves for receivables that are determined to be uncollectible, if any, in its allowance for doubtful accounts. After the Company has exhausted all collection efforts, the outstanding receivable is written off against the allowance. In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating a contract asset. A portion of our accounts receivable balance is therefore unbilled at each balance sheet date and is reflected as such on the consolidated balance sheet. |
Intangibles | Finite-lived intangible assets include trade names, developed technologies, and customer relationships and are amortized based on the estimated economic benefit over their estimated useful lives, with original periods ranging from 5 to 11 years. We continually evaluate the reasonableness of the useful lives of these assets. Finite-lived intangibles are tested for recoverability whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. Impairment losses are measured as the amount by which the carrying value of an asset group exceeds its fair value and are recognized in operating results. Judgment is used when applying these impairment rules to determine the timing of the impairment test, the undiscounted cash flows used to assess impairments, and the fair value of an asset group. The dynamic economic environment in which the Company operates, and the resulting assumptions used to estimate future cash flows impact the outcome of these impairment tests. |
Goodwill and Impairment | As of September 30, 2019, and December 31, 2018, we had recorded goodwill of $8,860,980 and $8,866,413, respectively. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired in the SharpSpring and GraphicMail acquisitions. Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350, “Intangibles - Goodwill and Other” |
Debt Issuance Costs | Third-party costs associated with the issuance of debt are included as a direct reduction to the carrying value of the debt and are amortized to interest expense ratably over the life of the debt. |
Income Taxes | Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB ASC 740, Simplifying the Accounting for Income Taxes The Company applies the authoritative guidance in accounting for uncertainty in income taxes recognized in the consolidated financial statements. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. There are no material uncertain tax positions taken by the Company on its tax returns. Tax years subsequent to 2015 remain open to examination by U.S. federal and state tax jurisdictions. In determining the provision for income taxes, the Company uses statutory tax rates and tax planning opportunities available to the Company in the jurisdictions in which it operates. This includes recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns to the extent pervasive evidence exists that they will be realized in future periods. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which are expected to be in effect in the years in which the temporary differences are expected to reverse. In accordance with the Company’s income tax policy, significant or unusual items are separately recognized in the period in which they occur. The Company is subject to routine examination by domestic and foreign tax authorities and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions. As of September 30, 2019, the Company is being examined by the U.S. tax authorities related to the 2016 and 2017 tax years. The Company does not expect any material adjustments as a result of the audits. |
Property and Equipment | Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of the assets. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred. Depreciation expense related to property and equipment was $161,105 and $125,416 for the three months ended September 30, 2019, and 2018, respectively. Depreciation expense related to property and equipment was $442,123 and $287,132 for the nine months ended September 30, 2019, and 2018, respectively. Repairs and maintenance costs are expensed as incurred. Property and equipment as of September 30, 2019 and December 31, 2018, is as follows: September 30, December 31, 2019 2018 Property and equipment, gross: Leasehold improvements $ 289,565 $ 197,268 Furniture and fixtures 675,104 611,171 Computer equipment and software 2,053,045 1,135,012 Total 3,017,714 1,943,451 Less: Accumulated depreciation and amortization (1,136,788 ) (682,653 ) $ 1,880,926 $ 1,260,798 Useful lives are as follows: Leasehold improvements 3-5 years Furniture and fixtures 3-5 years Computing equipment 3 years Software 3-5 years |
Revenue Recognition | The Company recognizes revenue from its services when it is probable that the economic benefits associated with the transactions will flow to the Company and the amount of revenue can be reliably measured. All significant sources of revenue are the result of a contract with a customer, and as such meet the requirements of recognizing revenue in accordance with FASB ASC 606. For the three months ended September 30, 2019, and 2018, revenue from contracts with customers was $5.7 million and $4.9 million, respectively. For the nine months ended September 30, 2019, and 2018, revenue from contracts with customers was $16.6 million and $13.5 million, respectively. For the Company’s internet-based SharpSpring marketing automation solution, the services are typically offered on a month-to-month basis with a fee charged each month depending on the size of the engagement with the customer. Monthly fees are recorded as revenue during the month they are earned. Some customers are charged annually in advance, for which revenues are deferred and recorded ratably over the subscription period. The Company also charges transactional-based fees if monthly volume limitations are reached or other chargeable activity occurs. Additionally, customers are typically charged an upfront onboarding and training fee. The upfront onboarding and training fees represent short-term “use it or lose it” services offered for a flat fee. Such flat fees are recognized over the service period, which is typically 60 days. For the SharpSpring Mail+ product, the services are typically offered on a month-to-month basis. Customers are either charged in arrears based on the number of contacts in the system during the billing period or in advance if the customer selects a plan based on e-mail volume. The Company also charges transactional-based fees if monthly volume limitations are reached or other chargeable activity occurs. Our products are billed in arrears or upfront, depending on the product, which creates contract assets (unbilled receivables) and contract liabilities (deferred revenue). Contract assets occur due to unbilled charges for which the Company has satisfied performance obligations. Contract liabilities occur due to upfront billed charges for which the Company has not yet fully satisfied all performance obligations. Both contract assets and liabilities are recognized and deferred ratably over their service periods. The Company makes judgements when determining revenue recognition. Because many of our contracts are billed in arrears, estimates are made for the transaction price and amounts allocated to each accounting period related to the performance obligations of each contract. There have been no changes to the methodology used in these judgements and estimates for determining revenues. Some of the estimates used when determining revenue recognition relate to variable customer consideration that changes from month to month. The Company uses the most likely amount method to determine the estimated variable consideration, relying on historical consideration received, customer status and projected usage to determine the most likely consideration amount. The amount of variable consideration recognized is constrained and is only included in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. The performance obligations are measured using the output method to recognize revenue based on direct measurements of the value to the customer of the services transferred to date. Most of the Company’s contracts have a predefined service period and are therefore satisfied over that period. This allows for a reliable way to measure performance obligations remaining and completed. The Company does have some contracts that are satisfied at a point in time upon delivery of services. The criteria for the completion of these contracts are defined in each contract with a customer so that there is no judgment required to evaluate when the service is delivered to the customer. Any discount given is allocated to the performance obligation and is treated as a reduction to the transaction price. Due to the month to month nature of the Company’s contracts with customers, no financing or time value of money component exists related to the contracts with customers. Due to the month to month nature of the Company’s contracts with customers, we have elected to utilize the optional practical expedient from ASC 606-10-50-14 through 50-14A for disclosing the remaining performance obligations. The remaining performance obligations as of the balance sheet date consist of initial implementation and availability and use of the SharpSpring platform. Remaining implementation obligations typically are provided over a period of 30 days or less as of the balance sheet date. Remaining obligations of availability of the platform are provided over a period ranging from less than 30 days to 12 months as of the balance sheet date. From time to time, the Company offers refunds to customers and experiences credit card chargebacks relating to cardholder disputes that are commonly experienced by businesses that accept credit cards. The Company makes estimates for refunds and credit card chargebacks based on historical experience. |
Deferred Revenue | Deferred revenue consists of payments received in advance of the Company’s providing the services. Deferred revenue is earned over the service period identified in each contract. The majority of our deferred revenue balances (contract liabilities) arise from payments from customers in advance of service on a periodic basis (such as monthly, quarterly, annually or bi-annually). In situations where a customer pays in advance, the deferred revenue is recognized over the service period defined in the contract. Additionally, the Company has deferred revenue related to implementation fees for its SharpSpring marketing automation solution that are paid in advance. These implementation services are typically performed over a 60-day period, and the revenue is recognized over that period. Deferred revenue balances were $250,656 and $279,818 as of December 31, 2018, and 2017, respectively. Deferred revenue during the three months ended September 30, 2019, and 2018, increased by $191,727 and $19,833, respectively. Deferred revenue during the nine months ended September 30, 2019, and 2018, increased by $258,147 and $58,601, respectively. The Company had deferred revenue contract liability balances of $508,804 and $250,656 as of September 30, 2019, and December 31, 2018, respectively. The Company expects to recognize a majority of the revenue of these remaining performance obligations within 12 months. Approximately 7% of the deferred revenue balance is related to prepaid credits. These credits are recognized as they are used. The Company expects to recognize approximately half of the remaining prepaid credits within 12 months. |
Accrued Revenue | In cases where our customers pay for services in arrears, we accrue for revenue in advance of billings as long as the criteria for revenue recognition are met, thus creating an unbilled receivable. A portion of our revenue is therefore unbilled at each period. The accrued revenue balances were $740,425 and $554,603 as of December 31, 2018, and 2017, respectively. Revenue billed that was included in accrued revenue at the beginning of the period for the three months ending September 30, 2019, and 2018, was $880,333 and $646,452, respectively. Revenue billed that was included in accrued revenue at the beginning of the period for the nine months ending September 30, 2019, and 2018, was $740,425 and $554,603, respectively. Accrued revenue not billed in the three and nine months ending September 30, 2019, and 2018, was $927,952 and $697,101, respectively. The Company had accrued revenue balances of $927,952and $740,425 as of September 30, 2019, and December 31, 2018, respectively. |
Concentration of Credit Risks and Significant Customers | Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. At September 30, 2019, and December 31, 2018, the Company had cash balances at financial institutions that exceed federally insured limits. The Company maintains its cash balances with accredited financial institutions. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. There were no customers that accounted for more than 10% of total revenue or 10% of total accounts receivable for any financial period presented. |
Cost of Services | Cost of services consists primarily of direct labor costs associated with support, customer onboarding, account management, and technology hosting and license costs associated with the cloud-based platform. |
Credit Card Processing Fees | Credit card processing fees are included as a component of general and administrative expenses and are expensed as incurred. |
Advertising Costs | The Company expenses advertising costs as incurred. Advertising and marketing expenses, excluding marketing team costs, were $1,525,322 and $1,443,534 for the three months ended September 30, 2019, and 2018, respectively. Advertising and marketing expenses, excluding marketing team costs, were $4,556,539 and $4,187,234 for the nine months ended September 30, 2019, and 2018, respectively. |
Capitalized Cost of Obtaining a Contract | The Company capitalizes sales commission costs which are incremental to obtaining a contract. We expense costs that are related to obtaining a contract but that are not incremental, such as other sales and marketing costs and costs that would be incurred regardless of a contract being obtained. Capitalized costs are amortized using the straight-line amortization over the estimated weighted average life of the customer, which we have estimated to be 3 years. At September 30, 2019, the net carrying value of the capitalized cost of obtaining a contract was $1,209,280, of which $686,255 is included in other current assets and $523,025 is included in other long-term assets. At December 31, 2018, the net carrying value of the capitalized cost of obtaining a contract was $1,309,329, of which $699,159 is included in other current assets and $610,170 is included in other long-term assets. The Company amortized expenses for the costs of obtaining contracts of $199,058 and $194,479 for the three months ended September 30, 2019, and 2018, respectively. The Company amortized expenses for the costs of obtaining contracts of $630,815 and $557,718 for the nine months ended September 30, 2019, and 2018, respectively. |
Stock Compensation | We account for stock-based compensation in accordance with FASB ASC 718 Compensation — Stock Compensation, |
Net Loss Per Share | Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents for the period. For purposes of this calculation, options to purchase common stock, warrants, and the conversion option of the convertible Notes (Note 5) are considered to be potential common shares outstanding. Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s potential common shares outstanding were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. |
Comprehensive Income (Loss) | Comprehensive income or loss includes all changes in equity during a period from non-owner sources, such as net income or loss and foreign currency translation adjustments. |
Recently Issued Accounting Standards | Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of operations. In January 2017, the FASB issued guidance simplifying the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. Under current guidance, Step 2 of the goodwill impairment test requires entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value is recognized as goodwill impairment. Under the new standard, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. The new standard is effective beginning in January 2020, with early adoption permitted. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. The guidance became effective for the Company on January 1, 2019. The Company is using the modified retrospective transition method which allows the Company to recognize and measure leases as of the adoption date, January 1, 2019, with the cumulative impact being reflected in the opening balance of retained earnings. The application of the modified retrospective transition was applied to all active leases at the date of initial application. There was no impact to the Company’s retained earnings for the implementation of this accounting standard. The following tables present the cumulative impact on our financial statements upon adoption. Impact upon adoption of new ASU As of January 1, 2019 Right-of-use assets 5,715,510 Total Assets $ 5,715,510 Accrued expenses and other current liabilities $ (8,821 ) Lease liability (current) 344,883 Lease liability (non-current) 5,379,448 Total Liabilities $ 5,715,510 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment | September 30, December 31, 2019 2018 Property and equipment, gross: Leasehold improvements $ 289,565 $ 197,268 Furniture and fixtures 675,104 611,171 Computer equipment and software 2,053,045 1,135,012 Total 3,017,714 1,943,451 Less: Accumulated depreciation and amortization (1,136,788 ) (682,653 ) $ 1,880,926 $ 1,260,798 |
Schedule of property and equipment useful lives | Leasehold improvements 3-5 years Furniture and fixtures 3-5 years Computing equipment 3 years Software 3-5 years |
Accounting change adjustments | Impact upon adoption of new ASU As of January 1, 2019 Right-of-use assets 5,715,510 Total Assets $ 5,715,510 Accrued expenses and other current liabilities $ (8,821 ) Lease liability (current) 344,883 Lease liability (non-current) 5,379,448 Total Liabilities $ 5,715,510 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | As of September 30, 2019 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 120,000 (120,000 ) $ - Technology 2,130,000 (1,132,500 ) 997,500 Customer relationships 1,320,000 (737,250 ) 582,750 Unamortized intangible assets: 3,570,000 (1,989,750 ) 1,580,250 Goodwill 8,860,980 Total goodwill and intangible assets $ 10,441,230 As of December 31, 2018 Gross Net Carrying Accumulated Carrying Amount Amortization Value Amortized intangible assets: Trade names $ 120,000 (120,000 ) $ - Technology 2,130,000 (954,000 ) 1,176,000 Customer relationships 4,100,014 (3,410,014 ) 690,000 Unamortized intangible assets: 6,350,014 (4,484,014 ) 1,866,000 Goodwill 8,866,413 Total goodwill and intangible assets $ 10,732,413 |
Schedule of estimated amortization expense | Remainder of 2019 95,250 2020 332,000 2021 280,000 2022 228,000 2023 180,000 2024 141,000 Thereafter 324,000 Total $ 1,580,250 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Net carrying amount - notes | September 30, December 31, 2019 2018 Principal amount $ - $ 8,000,000 Accrued interest paid-in-kind - 304,301 Unamortized debt issuance costs - (122,153 ) Unamortized embedded derivative - 160,278 Net carrying value $ - $ 8,342,426 |
Interest expense | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Contractual interest paid-in-kind expense (non-cash) $ - $ 100,000 $ 139,372 $ 204,301 Amortization of debt issuance costs (non-cash) - 6,359 15,108 12,991 Amortization of embedded derivative (non-cash) - - (12,205 ) - Total interest expense $ - $ 106,359 $ 142,275 $ 217,292 Effective interest rate 0.0 % 5.3 % 4.9 % 5.3 % |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of computation of net loss per share | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net loss $ (2,527,113 ) $ (2,710,231 ) $ (9,659,147 ) $ (7,228,408 ) Basic weighted average common shares outstanding 10,948,416 8,530,858 10,028,246 8,482,976 Add incremental shares for: Warrants - - - - Stock options - - - - Convertible notes - - - - Diluted weighted average common shares outstanding 10,948,416 8,530,858 10,028,246 8,482,976 Net loss per share: Basic $ (0.23 ) $ (0.32 ) $ (0.96 ) $ (0.85 ) Diluted $ (0.23 ) $ (0.32 ) $ (0.96 ) $ (0.85 ) |
Schedule of potentially dilutive common stock equivalents | Three and Nine Months Ended September 30, 2019 2018 Warrants - 30,000 Stock options 1,419,844 1,475,689 Convertible notes - 1,093,907 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of fair value assumptions used in valuing stock options | Nine months ended September 30, 2019 2018 Volatility 49%-50% 48%-49% Risk-free interest rate 1.45%-2.59% 2.34%-2.99% Expected term 6.25 years 6.25 years |
Schedule of stock option activity | Weighted Weighted Aggregate Number of Average Average Remaining Intrinsic Options Exercise Price Contractual Life Value Outstanding at December 31, 2018 1,654,522 $ 6.07 8.2 $ 10,866,658 Granted 166,294 12.77 Exercised (185,212 ) 5.06 Expired (1,198 ) 5.18 Forfeited (214,562 ) 5.08 Outstanding at September 30, 2019 1,419,844 $ 7.14 7.6 $ 4,773,655 Exercisable at September 30, 2019 718,990 $ 5.14 6.6 $ 3,310,784 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Summary of warrants activity | Weighted Weighted Number of Average Average Remaining Intrinsic Units Exercise Price Contractual Term Value Outstanding at December 31, 2018 30,000 $ 7.81 1.1 $ 144,525 Granted - - Exercised (30,000 ) 7.81 Cancelled - - Outstanding at September 30, 2019 - $ - - $ - Exercisable at September 30, 2019 - $ - - $ - |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Future minimum lease payments | Operating Leases Remainder of 2019 184,560 2020 742,956 2021 766,546 2022 771,278 2023 794,937 Thereafter 4,020,754 Total undiscounted cash flows $ 7,281,032 Less imputed interest (1,837,344 ) Present value of lease liability $ 5,443,688 |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Disaggregation of Revenue [Abstract] | |
Disaggregated revenue | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue by Product: Marketing Automation Revenue 5,676,555 4,793,467 16,389,475 13,176,124 Mail + Product Revenue $ 47,423 $ 79,862 $ 178,221 $ 324,157 Total Revenue $ 5,723,978 $ 4,873,329 $ 16,567,696 $ 13,500,281 Revenue by Type: Recurring Revenue 5,391,989 4,420,872 15,384,507 12,331,999 Upfront Fees $ 331,989 $ 452,457 $ 1,183,189 $ 1,168,282 Total Revenue $ 5,723,978 $ 4,873,329 $ 16,567,696 $ 13,500,281 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property and equipment, gross | $ 3,017,714 | $ 1,943,451 |
Less: Accumulated depreciation and amortization | (1,136,788) | (682,653) |
Property and equipment, net | 1,880,926 | 1,260,798 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 289,565 | 197,268 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 675,104 | 611,171 |
Computer Equipment and Software [Member] | ||
Property and equipment, gross | $ 2,053,045 | $ 1,135,012 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 9 Months Ended |
Sep. 30, 2019 | |
Leasehold Improvements [Member] | Minimum [Member] | |
Useful lives | 3 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Useful lives | 5 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Useful lives | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Useful lives | 5 years |
Computer Equipment [Member] | |
Useful lives | 3 years |
SoftwareMember | Minimum [Member] | |
Useful lives | 3 years |
SoftwareMember | Maximum [Member] | |
Useful lives | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Right-of-use assets | $ 5,392,330 | $ 0 |
Total Assets | 34,509,273 | 24,007,276 |
Lease liability (current) | 362,065 | 0 |
Lease liability (non-current) | 5,081,623 | 0 |
Total Liabilities | $ 8,312,342 | 11,219,558 |
Change In Accounting Principle [Member] | ||
Right-of-use assets | 5,715,510 | |
Total Assets | 5,715,510 | |
Accrued expenses and other current liabilities | (8,821) | |
Lease liability (current) | 344,883 | |
Lease liability (non-current) | 5,379,448 | |
Total Liabilities | $ 5,715,510 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Convertible notes embedded derivative | $ 0 | $ 0 | $ 214,350 | ||
Change in fair value of embedded derivative features | 0 | $ 27,295 | 214,350 | $ (426,154) | |
Goodwill | 8,860,980 | 8,860,980 | 8,866,413 | ||
Allowance for doubtful accounts receivable | 215,663 | 215,663 | 127,516 | ||
Depreciation expense | 161,105 | 125,416 | 442,123 | 287,132 | |
Revenue from contracts with customers | 5,700,000 | 4,900,000 | 16,600,000 | 13,500,000 | |
Deferred revenue | 508,804 | 508,804 | 250,656 | ||
Deferred revenue increase | 191,727 | 19,833 | 258,147 | 58,601 | |
Deferred revenue recognized | 508,804 | 250,656 | |||
Accrued revenue balance | 740,425 | ||||
Accrued revenue billed | 880,333 | 646,452 | 740,425 | 554,603 | |
Revenue accrued but not billed | 927,952 | 697,101 | 927,952 | 697,101 | 740,425 |
Advertising and marketing expenses | 1,525,322 | 1,443,534 | 4,556,539 | 4,187,234 | |
Capitalized cost of obtaining a contract | 1,209,280 | 1,309,329 | |||
Current portion of cost of obtaining a contract | 686,255 | 699,159 | |||
Non-current portion of cost of obtaining a contract | 523,025 | $ 610,170 | |||
Amortized cost of obtaining contract expense | $ 199,058 | $ 194,479 | $ 630,815 | $ 557,718 | |
Minimum [Member] | |||||
Finite-lived intangible assets useful lives | 5 years | ||||
Maximum [Member] | |||||
Finite-lived intangible assets useful lives | 11 years |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Gross Carrying Amount | $ 3,570,000 | $ 6,350,014 |
Accumulated amortization | (1,989,750) | (4,484,014) |
Net Carrying Value | 1,580,250 | 1,866,000 |
Goodwill | 8,860,980 | 8,866,413 |
Total goodwill and intangible assets | 10,441,230 | 10,732,413 |
Trade Names [Member] | ||
Gross Carrying Amount | 120,000 | 120,000 |
Accumulated amortization | (120,000) | (120,000) |
Net Carrying Value | 0 | 0 |
Technology [Member] | ||
Gross Carrying Amount | 2,130,000 | 2,130,000 |
Accumulated amortization | (1,132,500) | (954,000) |
Net Carrying Value | 997,500 | 1,176,000 |
Customer Relationships [Member] | ||
Gross Carrying Amount | 1,320,000 | 4,100,014 |
Accumulated amortization | (737,250) | (3,410,014) |
Net Carrying Value | $ 582,750 | $ 690,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2019 | $ 95,250 | |
2020 | 332,000 | |
2021 | 280,000 | |
2022 | 228,000 | |
2023 | 180,000 | |
2024 | 141,000 | |
Thereafter | 324,000 | |
Total | $ 1,580,250 | $ 1,866,000 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 95,250 | $ 115,000 | $ 285,750 | $ 345,000 |
Credit Facility (Details Narrat
Credit Facility (Details Narrative) - Revolving Loan Agreement [Member] | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Line of credit facility, expiration date | Mar. 31, 2020 |
Western Alliance Bank [Member] | Prime Rate [Member] | |
Line of credit | $ 2,500,000 |
Loan interest rate | 6.75% |
Percentage of secured pledge of capital stock | 100.00% |
Percentage of pledge of foreign subsidiaries stock | 65.00% |
Convertible Notes (Details)
Convertible Notes (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Principal amount | $ 0 | $ 8,000,000 |
Accrued interest paid-in-kind | 0 | 304,301 |
Unamortized debt issuance costs | 0 | (122,153) |
Embedded conversion feature derivative | 0 | 160,278 |
Net carrying value | $ 0 | $ 8,342,426 |
Convertible Notes (Details 1)
Convertible Notes (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt Disclosure [Abstract] | ||||
Contractual interest paid-in-kind expense (non-cash) | $ 0 | $ 100,000 | $ 139,372 | $ 204,301 |
Amortization of debt issuance costs (non-cash) | 0 | 6,359 | 15,108 | 12,991 |
Amortization of embedded derivative (non-cash) | 0 | 0 | (12,205) | 0 |
Total interest expense | $ 0 | $ 106,359 | $ 142,275 | $ 217,292 |
Effective interest rate | 0.00% | 5.30% | 4.90% | 5.30% |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (2,527,113) | $ (2,710,231) | $ (9,659,147) | $ (7,228,408) |
Basic weighted average common shares outstanding | 10,948,416 | 8,530,858 | 10,028,246 | 8,482,976 |
Add incremental shares for warrants | 0 | 0 | 0 | 0 |
Add incremental shares for stock options | 0 | 0 | 0 | 0 |
Add incremental shares for convertible notes | 0 | 0 | 0 | 0 |
Diluted weighted average common shares outstanding | 10,948,416 | 8,530,858 | 10,028,246 | 8,482,976 |
Net loss per share basic | $ (0.23) | $ (0.32) | $ (0.96) | $ (0.85) |
Net loss per share diluted | $ (0.23) | $ (0.32) | $ (0.96) | $ (0.85) |
Net Loss Per Share (Details 1)
Net Loss Per Share (Details 1) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Warrants [Member] | ||||
Antidilutive securities | 0 | 30,000 | 0 | 30,000 |
Stock Option [Member] | ||||
Antidilutive securities | 1,419,844 | 1,475,689 | 1,419,844 | 1,475,689 |
Convertible Notes [Member] | ||||
Antidilutive securities | 0 | 1,093,907 | 0 | 1,093,907 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ (2,291) | $ 5,130 | $ 835 | $ (247,415) | |
Effective tax rate | 0.00% | 3.00% | |||
Deferred tax valuation allowance | $ 6,500,000 | $ 6,500,000 | $ 4,300,000 |
Defined Contribution Retireme_2
Defined Contribution Retirement Plan (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Retirement Benefits [Abstract] | ||||
Defined contribution plan, maximum annual contributions employee, percent | 99.00% | |||
Defined contribution plan, employer matching contribution, percent of match | 100.00% | |||
Defined contribution plan, employer matching contribution, percent of employees' gross pay | 3.00% | |||
Defined contribution retirement plan, expenses | $ 78,040 | $ 64,679 | $ 229,248 | $ 186,614 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Stock Option [Member] | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Volatility, minimum | 49.00% | 48.00% |
Volatility, maximum | 50.00% | 49.00% |
Risk-free interest rate, minimum | 1.45% | 2.34% |
Risk-free interest rate, maximum | 2.59% | 2.99% |
Expected term | 6 years 3 months | 6 years 3 months |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of shares outstanding, beginning | shares | 1,654,522 |
Number of shares granted | shares | 166,294 |
Number of shares exercised | shares | (185,212) |
Number of shares expired | shares | (1,198) |
Number of shares forfeited | shares | (214,562) |
Number of shares outstanding, ending | shares | 1,419,844 |
Number of shares exercisable | shares | 718,990 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 6.07 |
Weighted average exercise price granted | $ / shares | 12.77 |
Weighted average exercise price exercised | $ / shares | 5.06 |
Weighted average exercise price expired | $ / shares | 5.18 |
Weighted average exercise price forfeited | $ / shares | 5.08 |
Weighted average exercise price outstanding, ending | $ / shares | 7.14 |
Weighted average exercise price exercisable | $ / shares | $ 5.14 |
Weighted average remaining contractual life outstanding, beginning | 8 years 2 months 12 days |
Weighted average remaining contractual life outstanding, ending | 7 years 7 months 6 days |
Weighted average remaining contractual life exercisable | 6 years 7 months 6 days |
Aggregate intrinsic value, beginning | $ | $ 10,866,658 |
Aggregate intrinsic value, ending | $ | 4,773,655 |
Aggregate intrinsic value, exercisable | $ | $ 3,310,784 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||||
Weighted average grant date fair value of stock options granted | $ 6.43 | $ 2.88 | ||
Stock option expense | $ 252,799 | $ 192,202 | $ 746,498 | $ 575,081 |
Intrinsic value of stock options exercised | $ 0 | $ 246,672 | $ 1,432,655 | $ 404,273 |
Number of shares issued to non-employee directors | 2,340 | 5,184 | 6,696 | 21,054 |
Fair value of stock awards granted, vested and expensed | $ 31,508 | $ 57,457 | $ 103,402 | $ 143,268 |
Warrants (Details)
Warrants (Details) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Number of Units Outstanding, Beginning of period | shares | 30,000 |
Number of Units,Granted | shares | 0 |
Number of Units ,Exercised | shares | (30,000) |
Number of Units ,Cancelled | shares | 0 |
Number of Units Outstanding, End of period | shares | 0 |
Number of Units, Exercisable | shares | 0 |
Weighted Average Exercise Price Outstanding, Beginning of period | $ / shares | $ 7.81 |
Weighted Average Exercise Price Granted | $ / shares | 0 |
Weighted Average Exercise Price Exercised | $ / shares | 7.81 |
Weighted Average Exercise Price Cancelled | $ / shares | 0 |
Weighted Average Exercise Price Outstanding, End of period | $ / shares | 0 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 0 |
Weighted Average Remaining Contractual Term Outstanding, Beginning | 1 year 1 month 6 days |
Weighted Average Remaining Contractual Term Outstanding, Ending | 0 years |
Weighted Average Remaining Contractual Term, Exercisable | 0 years |
Intrinsic Value, Outstanding, Beginning | $ | $ 144,525 |
Intrinsic Value, Outstanding, Ending | $ | 0 |
Intrinsic Value, Exercisable | $ | $ 0 |
Leases (Details)
Leases (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 184,560 |
2020 | 742,956 |
2021 | 766,546 |
2022 | 771,278 |
2023 | 794,937 |
Thereafter | 4,020,754 |
Total undiscounted cash flows | 7,281,032 |
Less imputed interest | (1,837,344) |
Present value of lease liability | $ 5,443,688 |
Disaggregation of Revenue (Deta
Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Total Revenue | $ 5,723,978 | $ 4,873,329 | $ 16,567,696 | $ 13,500,281 |
Recurring Revenue | ||||
Total Revenue | 5,391,989 | 4,420,872 | 15,384,507 | 12,331,999 |
Upfront fees | ||||
Total Revenue | 331,989 | 452,457 | 1,183,189 | 1,168,282 |
Marketing Automation Revenue | ||||
Total Revenue | 5,676,555 | 4,793,467 | 16,389,475 | 13,176,124 |
Mail + Product Revenue | ||||
Total Revenue | $ 47,423 | $ 79,862 | $ 178,221 | $ 324,157 |